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Our view: Good timing for a bit of good news

Herald pull quote, 10/16/19
We are part of The Trust Project.

After the completion of the Dakota Access Pipeline, the Herald noted a resurgence in the state’s oil industry.

We opined: “A key reason for the resurgence of North Dakota’s Oil Patch is 1,172 miles long and 30 inches in diameter. The Dakota Access Pipeline, thoroughly vilified by protesters, has been capable of carrying 470,000 barrels of Bakken crude in oil daily since the $3.78 billion pipeline started operating ... providing access via a hub in Illinois to refineries near the Gulf Coast. It’s no accident that oil production, slumping since prices plunged several years ago, has rebounded since the pipeline went online.”

Once the pipeline became operational, we noted, it created a savings of roughly $7.50 per barrel from the price Bakken producers were getting for their crude. By itself, $7.50 isn’t much – perhaps akin to the amount of walking-around money in a typical North Dakotan’s wallet; but considering how many barrels of oil are produced each day in North Dakota, it’s huge.

And North Dakota is a great beneficiary, since the savings boosted oil production in the state. That increased production leads to more tax dollars coming to the state and, thus, the people.

So the pipeline, fiscally speaking, has been good to North Dakota’s bottom line.

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Now comes another development that could help.

The Herald reported early this week that a deposit of sand found within the state’s borders could lead to even more cost savings in the oil industry. The sand was found in McHenry and Mercer counties and is specifically needed in the process of hydraulic fracturing. Generally, oil companies have been forced to find that sand elsewhere, hundreds of miles from North Dakota. It costs $34 per ton.

Once again, that cost might not seem like much by itself. But considering each well requires thousands of tons of sand, the costs can quickly add up. Having a source of sand within the state can greatly reduce shipping costs. In the Herald’s report, published Sunday, the newspaper noted that savings could amount to as much as $150,000 to $300,000 per new Bakken well.

Will this new development spur greater oil production in North Dakota?

Based off what we were told by Fred Anderson, a North Dakota Geological Survey geologist, we have high hopes. Anderson told us it could be a “game-changer” for the state.

“It’s a huge deal for the state of North Dakota,” he said.

This is some needed good news for a state that relies so heavily on a commodity driven economy. In the not-too-distant past, oil prices have dipped, causing an economic slowdown. This year, the agriculture sector is struggling due to trade wars and miserable weather throughout the growing season and, now, during the harvest.

North Dakota sure could use a – in Anderson’s words – “game-changer” right about now.

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