Western North Dakota energy service leaders, legislators optimistic after oil conference

BISMARCK — As the price of oil hovered around $50 a barrel last week, many western North Dakota oilfield and energy service companies turned to the Williston Basin Petroleum Conference to try to get a feel for where their industry is headed.

Most said they now feel better about the future of their businesses, as do state legislative leaders.

“What stood out to me was really the positivity,” said Matthew R. Kostelecky, president of B. J. Kadrmas, a Dickinson oilfield service company. “I really thought we’d be coming here with a lot of doom and gloom, obviously. But after listening to a lot of these CEOs and important people in business, it really just seems like this is the time to be efficient, smart, creative, kind of weather the storm, and it’s all going to come back.”

The past two years have been the 37-year-old Kostelecky’s first oil price downturn. He took over the business midway through the boom, only to watch work slow after a couple years. He paid close attention to what Whiting CEO Jim Volker and ConocoPhillips Lower 48 President Don Hrap said when they spoke at the conference.

“The attitude is that ultimately there’s a positive outlook for the future, but I think this is a new normal,” Kostelecky said. “For my generation, this is the first time that we’ve seen this. So it’s new to us, but the industry veterans, they’ve been there, they’ve done that. It’s just like anything else. You have to get past these difficult times.”

State Sen. Kelly Armstrong, R-Dickinson, said he felt conference attendees left invigorated by Thursday speeches from Republican presidential candidate Donald Trump and former college football coach Lou Holtz.

He said Trump’s energy platform resonated with the industry folks in the building, and tied into themes he heard throughout the week.

“We need consistent, reasonable regulation that protects the environment while allowing people to do business,” said Armstrong, the NDGOP chairman and son of Dickinson oilman Mike Armstrong. “All they want is tax certainty and regulatory certainty. That’s what they want. Especially for some of these tertiary things for the oil industry.”

Along with an industry push for better regulations, innovation at the wellhead and the future of value-added petroleum byproducts and industries were focused on throughout the week.

North Dakota Senate Majority Leader Rich Wardner, a Dickinson Republican, sat through multiple sessions, listening to everything from the future of natural gas liquids to industry price predictions. He said he feels that while recovery may time some time, “things are looking up for the industry.”

“I heard this: $65 oil is the new $100 oil because they’ve now got so many efficiencies,” Wardner said. “Technology is moving forward in allowing the industry to get more oil out of the rock.”

Paul Steffes, CEO of Dickinson-based Steffes Corp., said many industry leaders anticipate gradual uptick in work. Hearing that, he’s a more enthusiastic about business prospects.

Steffes Corp. manufactures equipment used at the wellhead during the extraction process, most notably its engineered flare systems that have decreased the amount of natural gas flared throughout the Bakken.

Steffes said he spoke with several people who said their companies will need more equipment to support their drilled but uncompleted wells (DUCs) once they’re put into production.

“It certainly has a possibility that we could be spiked and be much busier than we have ever planned we were going to be, as soon as they finish these DUCs,” he said. “It is possible that we’ll be busier than we’ve ever been. That is kind of a scary thing.”

KC Homiston, the co-owner and president of Highlands Engineering in Dickinson, said he’s accepted the oil industry’s “new normal.”

The oilfield aspects of Highlands’ business have declined during the slowdown because, as a civil engineering and land surveying firm, they service companies who put up rigs. There are less than 30 rigs in North Dakota today. Throughout much of 2014, there were more than 190 rigs.

“That’s the bread and butter of what we do for them,” Homiston said. “A lot of our work is dependent on the number of rigs that were in play.”

Homiston said he thought the conference had “less buzz” and fewer people compared to the one he attended in May 2014, when the price of a barrel of oil was around $109 and there were 191 drilling rigs in the state. Still, he’s more optimistic about the industry than he has been.

“You talk to people, I think they still have a smile on their face and they think the long-term optimistic conversation is still there,” he said.

Homiston said he anticipates a slow uptick in business once DUCs starting going into production.

Referencing speeches given by from MBI Energy Services CEO Jim Arthaud and other industry leaders, Homiston said the overarching message from the conference was simple.

“Hang in there. It’s coming back.”

Editorial: Oil export ban repeal part of long game

In what has become dark days for the U.S. oil industry and the thousands of workers it supports, Congress provided some light this week by agreeing to repeal the American crude oil export ban as part of the 2016 spending bill. President Barack Obama signed the bill late Friday.

It’s a huge and historic moment for the sagging oil industry, which has seen prices bottom out to seven-year lows and drilling rigs stacked across the U.S. — in North Dakota and Texas, in particular — while thousands of oil workers lost jobs in the process.

North Dakota Democratic Sen. Heidi Heitkamp played a key role in making sure this happened, working the folks on her side of the aisle alongside Alaska Republican Sen. Lisa Murkowski to assure bipartisan support. North Dakota Republicans Sen. John Hoeven and Rep. Kevin Cramer also kept pushing their bipartisan colleagues. Hoeven called it a “win across the board.”

 While the bill is not without some major flaws — which we won’t go into here — the Republicans are happy because the oil export ban has been lifted and the Democrats are pleased because the bill included big tax breaks for wind and solar energy.

 Many energy analysts have theorized that lifting the oil export ban will serve to help prop up oil prices just enough to make drilling in North Dakota more profitable, thereby creating jobs and keeping our energy industry humming while ensuring gasoline prices stay manageable for the everyday American.

But, as The New York Times noted earlier this week, the impact of lifting the ban is “extremely complicated.” The main point is that repealing the ban allows oil companies to dictate who gets to buy their crude, whether it’s a refinery in the U.S., China or elsewhere.

Earlier this fall, MBI Energy Services CEO Jim Arthaud told The Press he often analogizes the oil export ban into farming terms. He said, in the simplest of terms, telling the U.S. it can’t export oil but we can export gasoline and other refined fuels is like telling farmers they can’t sell their wheat for export, but they can export bread.

“They know now if they produce this oil and if they market this oil, the entire world is available for them in this market,” Heitkamp said in a phone call with North Dakota media earlier this week
She added that killing the ban won’t have immediate impacts on the North Dakota energy industry and called it a “long-term fix.” She added that the recent oil price freefall “obviously amped up the intensity” to get it tacked on to the spending bill.

The senator is right when she says this is all part of a long game. We shouldn’t expect the ban’s repeal to be some sort of magic switch that cranks things in the Bakken back up to summer 2014 levels immediately. It’s going to help, even if it takes a while.

 Will it bring the energy success story back to western North Dakota? Only time will tell.

Cutbacks in the Bakken: Baker Hughes layoff of 117 employees biggest signal yet of slowdown

Baker Hughes' Dickinson facility.
Baker Hughes’ Dickinson facility.

Falling oil prices and the resulting oil drilling slowdown in the Bakken Oil Patch has led one of the world’s largest oilfield services companies to make major cutbacks at its Dickinson office.

Baker Hughes sent a letter of notice to Dickinson Mayor Dennis Johnson on Wednesday, stating it was permanently terminating 117 employees here — most of them field operators and specialists.

In the letter, Baker Hughes stated that falling oil prices “have negatively impacted the market and reduced the overall need for the services provided by Baker Hughes.”

The Work Adjustment and Retraining Notification Act requires companies that plan to terminate more than 100 employees alert area and state workforce services, as well as the mayor of the city where the layoffs occur. Baker Hughes did not release how many workers it still employs at its Dickinson office.

Johnson said, in his 15 years as the city commission’s president, he cannot remember receiving a similar letter.

“Historically, at least for quite a while, there haven’t been any layoffs of that magnitude,” he said.

Continue reading “Cutbacks in the Bakken: Baker Hughes layoff of 117 employees biggest signal yet of slowdown”

Dickinson’s little world hinges on the big picture

A look at the neighboring Halliburton and Baker Hughes campuses in north Dickinson.

Last week brought word of numerous brand-name businesses planning to open in Dickinson.

Franchisees of Famous Dave’s barbecue restaurants are making plans to come here — though they aren’t sure where or when — and Five Diamond properties says Petco, JoAnn Fabrics and Dollar Tree are among the retailers planning to lease space in its new development planned for west Dickinson. The Roers West Ridge development has Menards and hotels that are sure to draw other big-box stores. Who knows? Maybe someone will even bring in Target for those of you who can’t stand Walmart.

I say this all the time because I believe it will be true: At the rate we’re going, there is going to be an entirely new part of Dickinson off Interstate 94’s Exit 59 in a couple of years.

Continue reading “Dickinson’s little world hinges on the big picture”