American Oil and Gas Reporter - September 2020 - 94

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ConventionSection: North Dakota Petroleum Council

Industry, State Pivot To Plugging Plan
BISMARCK, N.D.-As summer turns
to autumn, it is not only North Dakota's
farmers who are shifting from one season's
activities to another. Many of the state's
oil and natural gas producers temporarily
halted their output in the spring and summer, reports North Dakota Petroleum
Council President Ron Ness, but that is
changing.
"We are in harvest mode," he assesses.
"The economics have improved, so nearly
half the Bakken wells that were idled or
shut in are back on line."
Drilling and completion activity may
have slowed, but it has not stopped, Ness
details, with 10 or 11 rigs and two or three
fracturing crews at work in the Bakken
Shale as of late August. Presidential election
year considerations may prompt some
companies with federal leases to drill before
anything changes, Ness acknowledges, but
the main reason some activity continues
probably amounts to oil and gas producers
doing what they do best.
"The Bakken is still an incredible,
economic resource," he says. "Plus, companies think it is important to maintain
some activity and keep their teams going
to improve their efficiency and economics
so they are ready when it is time to add
more rigs. These companies have made
their mark in the Bakken, so they are
going to explore and produce it as they
hope for better economics."
NDPC also is sticking with the fundamentals. "As a trade association, we
are trying to reduce members' costs,"
Ness describes. "How can we ensure the
economics in North Dakota's oil and gas
fields are competitive with anywhere in
the world?"
Much of that task boils down to creative
thinking and recognizing every opportunity
to add value to production or subtract
from its costs, suggests NDPC Chairman
Kathleen Neset. She offers the example
of the state and industry's combined effort
to flare less associated gas.
"Flaring is a twofold problem that
treats natural gas as a waste product and
affects air quality," reflects Neset, owner
of Neset Consulting in TIOGA, N.D.
"We have to get beyond that by creating
a market for that natural gas. That takes
care of the environmental issue, but it
also makes our crude oil more profitable
by allowing the gas to add to-instead of
deducting from-its value."
94 THE AMERICAN OIL & GAS REPORTER

Win-Win Situation
As NDPC continues searching for
ways to reduce flaring, the group is
launching or supporting other mutually
beneficial initiatives, Neset reports. One
example, she observes, is the state's abandoned well plugging program, which has
the dual benefits of addressing an environmental issue while enlisting service
companies when they are less occupied
with other projects.
This spring, the North Dakota Emergency Commission and legislative budget
allocated $33.1 million in federal relief
from the Coronavirus Aid, Relief and
Economic Security Act to deal with more
than 500 North Dakota wells that are not
considered viable candidates to return to
production (AOGR, June 2020, pg. 18).
NDPC began calling for such a program
shortly after crude oil prices collapsed
this spring, Neset says, noting many
North Dakota policymakers quickly recognized its worth.
"NDPC staff have worked closely with
Department of Mineral Resources Director
Lynn Helms to get CARES Act funding,
get it off the ground and promote it to
help people understand its value to the
state," she recounts. "It is a fabulous program. People are actively plugging wells
drilled as far back as the 1950s, when
North Dakota's regulatory environment
was much looser."
According to Ness, plugging these
wells takes skill. "There are all kinds of
challenges and problems associated with
wellbores from that era," he says. "It is
necessary to hire industry veterans who
understand how to deal with those challenges. The program also has provided a
good learning experience for a lot of
younger folks in both the industry and
the DMR, another long-term benefit it
brings the state."
Simply watching the program has been
rewarding, Ness indicates. "It is great on
so many levels," he enthuses. "It checks
the box for employment during the pandemic downturn. It checks the box for
cleaning up old legacy fields for the
future. It is also a great use of CARES
Act funds.
"The reaction I have received from
service companies has been nothing short
of amazing. I have not seen anything like
it in my 21 years in this job," he continues.
"Companies want to keep their best em-

ployees, and those people want to work.
The Bakken's coming rebound will require
us to have quality hands on deck, and
this will help us retain many of them."
"Oil field personnel are working and
continuing to earn dollars for their families." Neset confirms. "I see no reason
this sort of program cannot be replicated
in other places around the country."
The environmental upside is significant, she adds. "The DMR is doing a
wonderful job in leading this plugging
phase and cleaning up blights on our
landscape," she commends. "Then, we
can reclaim and return everything to
native soils and vegetation."
Moreover, crossing many problem
wells off the industrywide to-do list may
help attract interest in some legacy fields,
Ness considers. "If you eliminate wells
that have passed from operator to operator-as something that has to be included
with each sale-that is better for the remaining assets," he notes. "In the long
run, this could create opportunities for
some rural, non-Bakken communities."
Ness expresses gratitude to North
Dakota policymakers for their integral
role in the undertaking. "Recognition
has to start with Lynn Helms and the
DMR staff," he praises. "We also applaud the political courage of the North
Dakota Industrial Commission and our
Agriculture Commissioner, Doug
Goehring, for advancing and approving
this-and really all the political leaders
who did so-through the CARES Act
funding. They all deserve a tremendous
amount of acknowledgment for making
it possible."
Still Hopeful
As he reflects on the health of North
Dakota's oil and gas industry, Ness says
recent times have been a roller coaster.
"About 10 months ago, I thought the industry had settled in and hit its stride,"
he recounts. "Activity was strong. Service
companies had found their niches. Producers all seemed to be humming along
and were focused on continually improving
their economics."
At the onset of the Russian-Saudi
crude oil price war and pandemic-associated economic downturn, industrywide
trepidation was palpable, Ness says. However, he emphasizes that the downturn is
a function of COVID-19 and will ease



American Oil and Gas Reporter - September 2020

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Contents
American Oil and Gas Reporter - September 2020 - Intro
American Oil and Gas Reporter - September 2020 - 1
American Oil and Gas Reporter - September 2020 - 2
American Oil and Gas Reporter - September 2020 - 3
American Oil and Gas Reporter - September 2020 - 4
American Oil and Gas Reporter - September 2020 - Contents
American Oil and Gas Reporter - September 2020 - 6
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