By: Amy Dalrymple, Forum News Service

WILLISTON, N.D. – Oil well blowouts are increasing in the Bakken, prompting regulators to take action.

North Dakota has had 23 blowouts in the past year, according to the Department of Mineral Resources.

“That’s up significantly,” said Lynn Helms, director of the department.

A blowout may be an uncontrolled flow of oil, gas, saltwater or a mixture of these.

“The fluids flowing out of the well can escape and they’re often flammable,” Helms said.

Eighteen of the 23 recent incidents resulted in fewer than 10 barrels of fluid released, and the spills were contained on location.

But five incidents were blowouts involving significant volumes and pressures, each spewing 600 barrels to more than 2,000 barrels of oil and saltwater.

The North Dakota Industrial Commission is pursuing action in two of those major blowouts and continues to investigate the three others, Helms said.

The commission is seeking $379,025 in penalties from Slawson Exploration, the company that operated a well near the Van Hook Arm of Lake Sakakawea that had oil, gas and saltwater flowing from it for three days last December before operators regained control.

A spill report from the commission says the blowout resulted in the release of 800 barrels of oil and 400 barrels of saltwater.

A blowout that same month in McKenzie County prompted the state Industrial Commission to seek $105,380 fines from Newfield Production Co.

Investigation continues into a an Aug. 14, 2012, blowout in Williams County, Helms said.

That incident also resulted in a worker’s death after he was struck by a pickup driven by another worker who was driving away from the blowout.

After the two significant blowouts last December, regulators approached the North Dakota Petroleum Council with concerns that some changes may need to be made to the state’s rules on well control, Helms said.

Industry representatives have formed a committee to develop best practices. The committee will report back to Helms’ department, and the input may lead to rule changes. In some cases, more training or education may be required.


 
 
Calling North Dakota “big sky country” would be an understatement. The clouds hang low and there is a density to them that sparks quick contemplation of the floodgates they can unleash.

There is a raw beauty to the prairies, with lush fields of wheat and grasses almost ready to be harvested.

In the Bakken oil region, shiny new pumpjacks litter the landscape. And it’s not just in North Dakota, but Montana and the Canadian provinces of Saskatchewan and Manitoba as well. The commodity is revitalizing the entire region.

But what stands out aren’t the pumpjacks, but all the activity going on around them. It’s all the services that are required to extract and move the oil that grabs your attention, and there is big money being spent to make it happen.

Also, the endless lines of oil railcars, with their shiny new paintjobs, line the Bakken region. One young man I spoke with was particularly enthusiastic about his prospects in the railroad services business. He said that his employer can’t find enough workers for the business they have. He was in full recruitment mode.

Williston is a small, busy town that is very much dedicated to serving the needs of agriculture and the oil patch. Of particular note is the construction going on; countless long-stay apartment buildings are in construction. An existing building advertised a furnished apartment for $700.00 a week.

Also noteworthy is the presence of oil and gas services companies like Halliburton Company (HAL), which has a substantial presence on the outskirts of town. Oil services are a big deal in the Bakken oil region. Everything has to move by truck; therefore, the business of freight in this region is a good one. Massive well valves take up entire flatbed trailers. The huge drilling rigs themselves require an enormous amount of infrastructure just to get set up.

The landscape in this part of the world is obviously changing. As route 1804 comes close to the Lewis and Clark State Park, views of Lake Sakakawea include large gas flares from oil well sites.

And then there is all the simple infrastructure you see around new pumpjacks, like large steel storage tanks, piping, fencing, electricity, security, and construction equipment. It’s the economic activity of spin-offs that you see, not the oil gushing from the ground.

With West Texas Intermediate (WTI) crude oil prices holding steadily above $100.00 a barrel, the business model for Bakken is a good one. Yet with everything in demand (including pricey Bakken stocks), value is skewed and getting the best bang for your buck isn’t so prevalent. 

Looking at all the activity that goes into creating a working pumpjack, I’d say that services are the way to go from the investor’s perspective. Even a spin-off industry like railroad services is relatively attractive compared to the built-in high expectations of junior Bakken stocks.

In any case, the landscape of the vast prairies is changing quickly. The oil boom has brought renewed prosperity to what has long been an agriculture-only economy. I suspect many locals wish it would remain that way.

 
 
As the oil boom continues in northwest North Dakota, so does the exponential growth in Williston.

A new study sponsored by the city estimates Williston's population has doubled since the 2010 census. The study done by North Dakota State University estimates that between 25,000 and 33,000 people are living in Williston, either permanently or temporarily. The 2010 U.S. Census listed Williston's population at 14,700 residents, although an updated estimate put the city's population at roughly 26,700 earlier this year. Researchers estimate the city's population could reach 44,000 people by 2017.

The numbers are staggering, and are hard to fathom. The Census Bureau lists Williston as the fastest-growing micropolitan area in the nation, and there appears to no end in sight.

The city has struggled to keep pace with providing the basic necessities for such a fast-growing population, and city officials have changed a number of ordinances and regulations, such as banning people from living in campers and RVs. The city has made strides in adding housing and other expanded services, but city officials know there is more work to be done especially if projections for a population of 44,000 people come true.

 

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