What If The Bakken Oil Boom Was Already Slowing Down?
In one of those turn of events in politics that nobody could have predicted, North Dakota Republican Party Chairman Robert Harms managed to turn himself into a hero for Democrats by calling for regulation of the oil industry to slow down production. Harms’ comments gave North Dakota Democrats the political cover they needed to express some of their more pointedly anti-oil opinions, but what if oil activity in the Bakken was already slowing down?
That’s the argument Continental Resources CEO Harold Hamm (the biggest operator in the Bakken) said in response to Harms:
“It looks to me like he’s saying we shouldn’t overreact to these situations, but that’s exactly what he’s doing,” Hamm said in an interview with Forum News Service this week.
Hamm particularly objected to Harms’ comment in a Reuters story that read, “Even people within the oil and gas industry that I’ve talked to feel that sometimes we’re just going too fast and too hard.”
“We shouldn’t overreact. We’re doing something that’s not only the best thing for North Dakota and for that area up there, but also for our entire nation,” Hamm said. “The world has been changed by the fact that we can produce energy of this quantity in America today.”
Hamm said the industry has shifted away from the phase of securing leases and moved into a more orderly development mode in North Dakota. Drilling rigs are no longer moving continuously, they’re drilling multiple wells on the same pad, Hamm said.
North Dakota had 193 drilling rigs operating on Wednesday, slightly higher than the number of rigs operating in the state in late 2013, but down from the all-time high of 218 rigs that were drilling in North Dakota in May 2012.
“The industry has slowed down. That’s been felt up there,” Hamm said. “I don’t know how much of a slowdown we should do.”
In the article, North Dakota’s top oil regulator Lynn Helms also “noted that the pace of drilling is about 15 percent slower than 2012 as the industry transitions into the development phase.”
So even without the mighty hand of the government, the oil industry is sort of regulating itself.
Which isn’t to say that some of Harms’ suggestions are totally without merit. We can all agree that rail cars need to be safety, and we need to figure out why these trains are derailing, but as I pointed out while discussing the matter on television recently we should be focused on catching transportation infrastructure up to production, not slowing production now to the capacity of the infrastructure.