“Rig count in the Williston Basin had stabilized, but the drop in oil price associated with anticipation of lifting sanctions on Iran and a weaker economy in China is leading to further cuts,” the most recent oil and gas report from the North Dakota Department of Mineral Resources states.
So far the drop in oil prices, and the drop and drilling activity, has had little impact on oil production which remained near the state’s record high through July even though the rig count has fallen off a cliff (see chart).
Even so, as the DMR report states, the slowdown in drilling seems to have stopped, albeit at a point that’s down 65 percent from September of 2014. One might be tempted to think that North Dakota has found the bottom of the market and that we need wait only until oil prices recover.
Except, again as the DMR report states, the Iran vote may prolong the oil price problems at the expense of one hell of a lot of economic prosperity here in North Dakota, not to mention a serious chunk of state tax revenues.
That’s because Iran will likely have its sanctions on oil exports raised soon even as American oil companies continue to operate under a domestic ban on exporting oil.
That’s bad for North Dakota. It means there will soon be more oil on the international markets with American companies prohibited from competing directly in that market.
Which brings us back to Heidi Heitkamp.
The Iran deal is obviously about a great deal more than oil exports, but the exports aspect of the deal will almost certainly have the greatest direct impact on the state. Heitkamp was a key vote on the deal, wooed by the Obama administration along with a handful of other on-the-fence Senators, and you have to wonder why Heitkamp didn’t use her position to exact some certainty from the Obama administration on energy issues.
Like maybe a pledge to raise the oil export ban for American oil companies. Or perhaps just as importantly, a commitment to clear the bath for more badly-needed pipeline infrastructure in the nation.
Either would have been a coup for North Dakota’s economic interests, but Heitkamp seems to have pursued neither, instead eschewing her campaign promises about independence to join a partisan Democrat majority to protect the Iran deal from bipartisan majority opposition in the Senate.
That’s the aspect of this vote that’s most painful for North Dakota, and potentially the most politically problematic for Heitkamp.