How low can they go? That’s the question I asked Richland County Commissioners in Montana’s Bakken oil country during a live broadcast at the Holiday Inn Express in Sidney on Wednesday.
This, after The New York Times reported on the falling oil prices. Previously, oil producers needed $80 per barrel oil in order to continue drilling in the Montana-North Dakota region. Now, The NYT says prices could drop as low as $60 per barrel without impacting the vast majority of domestic production.
So what does an influential county commissioner in Bakken oil country have to say. Here’s part of my conversation with Richland County Commissioner Duane Mitchell in Sidney.
Mitchell: “Today they tell me that $65 is the lowest it can go. But in order for you to drill these high dollar oil wells that we’re putting 12-14 million dollars in, they probably will not drill after $75 a barrel is what I’ve been told. And once it drops below $75 these rigs will just start laying over and waiting for the price to come back up, and I think the Saudis know that and that’s one of the reasons they’re dumping all their oil on us is because they want to see this thing go away.”
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— Aaron Flint (@aaronflint) October 22, 2014
Full audio of Wednesday’s Voices of Montana can be found on our podcast page by clicking here.
NYT: No End in Sight for US Oil Production Boom
A drop in oil prices has been great news for those of us consumers out there. But how low can oil prices go before the oil production that has been propping up Montana’s economy comes to a halt?
The New York Times offers a very interesting report: Despite Slumping Prices, No End in Sight for U.S. Oil Production Boom
Falling oil and gasoline prices have sent oil company stocks tumbling, but oil experts say the boom in American energy production shows no signs of slowing down, keeping the market flush with crude and gasoline prices low.
Even after a drop of as much as 25 percent in oil prices since early summer, several government and private reports say that it would take a drop of $10 to $20 a barrel more — to as low as $60 a barrel — to slow production even modestly.
Slowing American oil production is like slowing a freight train moving at high speed. The current production of 8.7 million barrels a day, the highest in nearly a quarter-century, is more than a million barrels a day higher than it was only a year ago. Most companies make their investment decisions well in advance and need months to slow exploration because of contracts with service companies. And if they do decide to cut back some drilling, they will pick the least prospective fields first as they continue developing the richest prospects.
The Energy Department this week reported that only 4 percent of shale production in North Dakota, Texas and other states needed an oil price above $80 a barrel for producers to break even on investments. One reason is that improved efficiencies in hydraulic fracturing and other modern production techniques have increased the output of each new well month after month in recent years.