On Tuesday, the North Dakota Industrial Commission voted the state should not get involved in repairing the oil market, saying the free market should repair itself.
Department of Mineral Resources Director Lynn Helms says the free market has already been on the mend. He says oil prices are now back in the $40 range after a low in the single digits.
This comes as about a thousand wells came back online in the state, last week. But, with the federal order to shut down the Dakota Access Pipeline this week, Helms says he expects some of those will be shut in once again.
He says the current price of oil is stuck, and it needs to be even higher to bring more wells back into production.
“Airline travel has not returned to normal, nor have the large ocean-going transportation vessels that move goods back and forth across the oceans, and those are the two big users of liquid petroleum. So we have yet to see the demand for liquid petroleum fuels get anywhere near back to normal,” Helms explained.
Although the Commission voted against the economic waste classification, the state is getting involved in protecting oil companies in other ways.
The Bakken Restart Task Force is focusing on a few strategies, including, regulatory relief.
Then, there are the 368 orphaned wells that the state has confiscated to be plugged and reclaimed.
Critics question if the state should be bailing out big oil companies. Helms says it’s about putting those who were laid off from the oilfield back to work.
In fact, $66.4 million in CARES Act money will be used for the reclamation effort.
We asked Helms if it will be enough.
He responded, “We think it will fall short. and that’s why the Legislature committed an additional $10 million from the Abandoned Wells Site Restoration Fund. That’s a fund that’s been built up over the years from fees and penalties that have been paid by industry.”
At the end of the month, the oil and gas division is holding another hearing contemplating adding about another 40 wells to the confiscation list.