Here’s a ray of sunshine for North Dakota’s economy. As oil prices see a modest recovery so too has drilling activity in the state:
BISMARCK, N.D., May 31 (UPI) — North Dakota saw the number of rigs activity exploring for or producing oil and gas increase by more than 10 percent from last week, state data show.
Data from the state government show 28 rigs in service early Tuesday, up 16 percent from last week. The increase follows a slow march toward $50 per barrel for West Texas Intermediate, the U.S. benchmark for the price of crude oil. WTI is up about 4 percent from last week.
When oil prices fell so too did drilling activity, as you can see from the chart below. Yet despite the decline in the rig count, oil production has remained relatively stable. Surprisingly resilient, in fact, as many observers expected North Dakota’s daily oil production to fall much faster. In truth, through March (the most recent numbers available), the state has seen a decline of less than 10 percent from the all-time daily production record set in December of 2014:
Still, it’s the drilling operations that are perhaps the most important for North Dakota’s economy. Each rig operating produces thousands and thousands of dollars in direct and indirect tax revenue for the state every day, not to mention a lot of commerce for area businesses.
If drilling activity begins to come back, even just a little bit at a time, it may mean that we can finally be assured that the state’s budget and economic outlook isn’t going to get any worse.
Of course, this is the oil industry, and nothing is certain.