fedgazette

North Dakota oil patch feeling pinch

North Dakota State Roundup

Published January 1, 1992  |  January 1992 issue

Despite a rise in the number of drilling rigs from nine in September to 15 in early December, the oil patch in western North Dakota is feeling the effects of a weak national economy.

While oil prices have been running slightly higher than experts predicted, oil production continues to decline. State budget predictions called for prices to be $21.13 per barrel for the third quarter, but actual prices in that quarter averaged $21.32. For the past year oil prices have been slightly higher than expected, according to Lowell Ridgeway, executive director of the North Dakota Petroleum Council.

But production has fallen from 97,000 barrels of oil per day in August to 94,000 in September. "This is the first year since 1979 that production will fall below an average of 100,000 barrels per day," Ridgeway says.

Based on decreased oil production, state budget analysts have scaled down their expectations of revenue from oil taxes, and Ridgeway says he "sees nothing that's been happening to indicate a turnaround any time soon."

A dramatic indication of the decline of oil's prominence in the state's economy is obvious in employment figures: In 1984, 10,500 jobs in western North Dakota were tied to oil; in September 1991, only 3,200 jobs were oil-related.

There's also some concern about future Middle East oil policies. OPEC countries may increase their production, which would have an effect on prices, according to Ridgeway. And Ridgeway says that Kuwait predicts that it will pump 200,000 barrels per day by the end of the year, with full daily production of 2 million barrels resuming by the end of 1992.

Ridgeway says the situation in North Dakota is mirrored in other states, and in his view the solution to these problems lies with national policy. "Frankly we need a national energy policy to address these issues. There's not a whole lot a state can do," Ridgeway says.

Kathy Cobb

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