At this point, Bakken barely remembers what a drill bit looks like, and the shale boom that once dug at its landscape is now a fleeting memory.
Almost no new wells were drilled in the Bakken play in the first quarter of the year, a survey by Hart Energy has revealed. The survey, involving eight workover contractors in the Williston basin, paints a grim picture of the industry, in which service providers can only hope that prices will rebound soon enough that they can avoid closing shop. And prices aren’t the only problem.
The respondents in the Hart Energy survey said it was basically all maintenance in the first quarter, with only about 60 wells getting completed by the end of March. These, by the way, were wells from the drilled-but-uncompleted inventory in the Bakken, not new ones. They also said that despite the moment being ripe for a consolidation, there was no interest in M&A.
Respondents replied unanimously that a rebound in oil prices would improve their situation, and added a few other factors that could help boost the workover sector, such as banks loosening their lending policies, allowing E&Ps to invest more in new production and shrinking the DUC inventory to stimulate the market.
However, even with prices improving – which they already are – the drilling and maintenance firms operating in the Bakken are facing a challenge: workforce shortage. One survey respondent was quoted as saying that “even if prices went to $100 per barrel of oil, you don’t have any frack crews available to complete all the wells that need fracking.” Related: Saudi Cabinet Green Lights $141B Oil Diversification Plan
Now, that’s a real problem that can very efficiently undermine the hesitant optimism about Bakken’s future that’s being spread by North Dakota’s governor and some industry insiders, such as Whiting Petroleum’s CEO. They may well consider the oil industry in the play solid and profitable, but the question of whether the industry will have the capacity to fully exploit the price rebound remains open.
It would have an easy answer if all those laid off at the height of the price rout had just sat around waiting for better times and better prices. They, however, have not sat around. Many have gone into the solar industry. New jobs there are expected in the six-figure range this year, although this forecast should be taken with a pinch of salt given the recent troubles some of this industry’s leaders have found themselves in. But even with these troubles, last year, employment in solar exceeded employment both in the oil and gas extraction sector and in coal mining. Related: Permian Springs To Life With $50 Oil
The drive towards more renewables and less fossil fuels in the energy mix is a pretty clear and irreversible one. However, high oil prices rebound, chances are that the industry will never be the same again after this last crisis. Before, there weren’t many alternatives when prices were low and people lost their jobs because of it. They were ready to come back at the first sign of improvement.
Now things are different – the energy market is a much wider one, with more varied job opportunities than just oil, gas, and coal. E&Ps and drillers in the Bakken and elsewhere may really find themselves in workforce shortage trouble in a few years if prices continue to rise.
By Irina Slav for Oilprice.com
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