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(Star Tribune) Oil industry experts have been making dire predictions of $20 per barrel oil. In North Dakota, they’re now reality, prompting warnings of more bankruptcies and less drilling in 2016.
Although the U.S. domestic crude oil benchmark is higher — $29.64 per barrel — Bakken producers must sell at a discount because of the region’s limited oil pipelines and the higher cost of alternate shipping methods.
On Friday, North Dakota light sweet crude dropped to $20 per barrel at the wellhead, the lowest price since 2002, the state Department of Mineral Resources said. That’s one-fifth of what North Dakota producers got in early 2012, when the Bakken oil boom was at its peak.
Now, just 49 drilling rigs are operating in the state, less than a quarter of the number at the peak.
The department’s director, Lynn Helms, said the state’s oil industry is “running on empty” and quoted a verse from Jackson Browne’s song of that name during his monthly “Director’s Cut” conference call.
“We are down in the bottom of the bottom of the tank in terms of cash flow and capital,” Helms said of the state’s oil producers, two of which are in bankruptcy.
Helms said he expects another company to file bankruptcy shortly, and four or five more failures could be down the road. He didn’t name the companies.
“We have looked at … production, wells and situations and tentatively think there are four or five more [companies] at these oil prices that are going to run to the end of their financial rope by the end of 2016,” said Helms.
Seven of the 10 largest North Dakota oil producers reported losses in the third quarter, including the top three, Whiting Petroleum, Continental Resources and Hess Corp.
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