According to a report out today from the Oil and Gas Division at the Department of Mineral Resources the oil rig count in North Dakota took a nose dive compared to previous years.
At the beginning of March the state had over 120 rigs operating. Now, the state is down to under 100.
Of course, this isn’t unique to North Dakota. The national rig count has taken a similar plunge per this data from Baker Huges:
This is a big deal. Previously Lynn Helms, North Dakota’s top oil regulator, had said previously that he expected the rig count to “bottom out” at about 100.
But we’re under 100 rigs now with no turnaround in oil prices in sight.
This matters because even as Democrats accuse Republicans over overstating revenue declines, and demand continued aggressive spending increases, the amount of money the state will have to spend is very much tied to oil production.
The revised revenue forecast released earlier this month is built on the assumption of about 1.1 million barrels per day in production. The state averaged just over 1.1 million barrels per day in January according to the latest DMR report.
Oil wells don’t produce uniform amounts of oil over their lifetimes. They usually hit a peak early on, and then there is a steady decline in production until the well is spent. In order for North Dakota to keep its daily oil production above the 1.1 million estimate assumed by budget forecasters the rig count has to stay up.
Only, the rig count isn’t staying up.