Oil advocates: More investment needed to increase Bakken oil production

Posted at 8:26 AM, Mar 10, 2022
and last updated 2022-03-10 10:32:42-05

BILLINGS — As Montanans feel the pinch at the gas pump, many are wondering how domestic oil production can be ramped up — and what role the Bakken oil formation near Williston, North Dakota, could play in bringing gas prices down.

"Things have changed over the last 10 days. Now the economic upside should be attracting a lot more capital, but it's really not," said Ron Ness, president of North Dakota Petroleum Council, on Wednesday.

The average cost per gallon of gas across Montana was $3.99 on Wednesday, according to the price-tracking website GasBuddy which is up from one year ago when the average cost stood at $2.39 per gallon.

Ron Ness, North Kakota Petroleum Council President, speaks with MTN News via video call.

Seven days ago, Montana's average price was $3.52, which means prices have risen 13% in just one week. Part of the reason is sanctions placed on the import of oil from Russia, due to the country's invasion of Ukraine.

In the Bakken, production drastically dropped in 2020 and 2021 as the price of oil plummeted to a 30-year-low during the COVID-19 pandemic.

"We had an over surplus of oil that we couldn't get rid of. That's what drove the prices negative," said Montana Petroleum Council executive director Alan Olson.

Alan Olson, Montana Petroleum Association executive director, speaks with MTN News via video call on Wednesday.

But production is ramping back up. According to the North Dakota Department of Mineral Resources, as of Tuesday, there were 33 active oil rigs on the North Dakota side of the Bakken, up from 15 active rigs at the same time last year — although still far below the 55 active rigs in 2020.

Part of the challenge of ramping up production is a lack of workers. Many went to Texas and New Mexico over the last few years to work in the Permian Basin.

"That caused a lot of issues in our industry. We lost a lot of equipment. We lost a lot of employees. Right now, it's kind of hard getting that back," Olson said.


But Ness said the lack of workers is just part of the problem. He also puts the blame on Biden administration nominees for statements he believes are choking off investments into domestic oil production.

"They have been discouraged from investing in energy for the last 15 months. That has stymied investment into oil and gas and therefore, it's harder to ramp up. Producers can only do what they can go out and find the money to do on the market. That's a big, big issue in all of this discussion. It all starts with the banks and the lenders and others wanting to support increased gas production in America," Ness said.

Biden has publicly argued his administration is not holding back domestic energy production and said those claims are flat out false. Russian oil and gasoline account for about 8% of all energy imports to the U.S.

Olson said leaders in Washington, D.C., need to work harder to help keep the price of gas down.

"If the politicians in Washington want to quit beating the drum to do away with fossil fuels, I think we could get some more to market domestically. Internationally, things are a little bit tough. Which dictator do we want to get crude oil from?" Olson said, referring to Russia, Iran, and Venezuela.