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Our view: More research dollars should be considered

If producers could extract a single percentage point more oil from North Dakota shale, it would generate billions of dollars more in annual oil revenue and millions more for the state.

Those are estimates from UND President Mark Kennedy and UND's Energy and Environmental Research Center. For the sake of this argument, let's use their numbers.

North Dakota production is around 1.1 million barrels per day, and a barrel is selling for around $70. Over the course of 365 days, that comes to $28 billion in oil revenue.

In the petroleum industry, "oil in place" refers to the total content of an oil reservoir. With today's technology, producers can recover approximately 8 percent of oil in place within the Bakken. Moving that number to 9 percent could result in oil production revenue of upwards of $31.6 billion. Since the state taxes oil at a rate of 10 percent (in some cases up to 11 percent), that potential increase of approximately $3 billion would generate around $300 million or more in new tax dollars for the state.

In other words, that 1 percentage point increase in oil-in-place recovery would result in a 12.5 percent increase in revenue.

However the complicated math works out, it's still a good point. And it's why we're glad to see collaboration between Kennedy and NDSU President Dean Bresciani, who are joining in a unison chorus to discuss the merits of investing more state dollars into research at those two universities.

They will tell lawmakers that, as Kennedy puts it, research has the ability to diversify and transform the state's economy while providing more career opportunities for the students who graduate from the university system.

At present, the state's preliminary budget includes $10 million for research and another $5 million for workforce. Bresciani and Kennedy, however, are shooting for the moon: They each want $25 million annually for their respective university; if not $25 million per year, then $25 million per biennium. That's quite a bit more than the planned — and shared — $10 million.

If the presidents can convince decision makers, think about the potential. As noted, it could help fund programs to perfect methods to extract another miniscule percentage of oil from the shale beds in western North Dakota. This kind of research already is happening at places like the Energy and Environmental Research Center and other departments at UND. If those clever people can find a way to further improve oil extraction technology, the financial reward for the state would more than pay for the requested research dollars.

Also, the state needs to be cognizant of competition in the Unmanned Aerial Systems industry. North Dakota is today considered the industry leader, but New York covets that title and is investing millions to wrench from North Dakota's grip. This should be unnerving for North Dakota, the Red River Valley and Grand Forks in particular.

Presidents Kennedy and Bresciani are right to combine their message in hopes of gaining more research dollars for their universities. If the right people can be convinced, the entire state could benefit.