Oil industry rebounds in N.D.

Investors are putting money into hydraulic fracking rigs

MOUNTRAIL COUNTY, N.D. — For much of last year, Jeep Punteney was a casualty of the global oil price crash that halted North Dakota’s petroleum boom.

His career was on hold for seven months while he picked up sporadic work in construction.

“I put my resume out and got into the same line as everyone else,” said Punteney, 42, who went to college for chemical engineering and has spent most of the past two decades working the oil patch.

Now he’s back in the fields.

North Dakota’s oil country boomed to unprecedented heights earlier this decade, transforming the state, beckoning legions of workers from Minnesota and rippling in other ways across the economy of the upper Midwest. Then, as swiftly as it erupted, it crashed.

Prices dropped from around $100 a barrel in 2014 to $30 early last year, bringing big financial losses for companies that had invested heavily in North Dakota production and bankrupting some of them outright. Jobs vanished.

Now there are strong signs of a rebound. Drillers are bringing rigs back. Some companies are scrounging to find enough workers, an about-face for an industry that shed almost half its jobs during the bust.

“The industry is coming back,” said Monte Besler of FRACN8R Consulting in Williston, N.D. “I don’t think it’s as robust as we’d like it to be. But it is definitely improving.”

The optimism remains tentative, as price and production levels would need to rise a lot more to rival the days of the boom. Newer fields in Texas and New Mexico are the hot spots in U.S. shale oil right now, drawing investment that might otherwise flow to North Dakota, the nation’s No. 2 oil producing state.

Nonetheless, North Dakota players that survived the crash started getting more active last fall, when major oil-producing nations agreed to output cuts that pushed prices back over $50 a barrel. Companies have worked to improve productivity, getting leaner to cope with current price levels.

Punteney is back at work supervising new well drilling sites for WPX Energy. What the past few years made clear is that the industry is at the mercy of oil prices.

“When you work in the oil field, you work in a boomand-bust world,” he said.

Global oil producers extended their output cuts late last month, but the price of oil indicates continuing uncertainty. The benchmark U.S. oil price has been hovering near $45 a barrel this week, below the important $50-per-barrel mark.

Oil inventories are still historically high, partly because U.S. oil production has risen sharply since last fall. And while OPEC and Russia — key oil playmakers — have indicated they’ll cap production for the next nine months, they could capitulate and produce full-out, driving down prices.

What made the big difference in U.S. production, particularly in North Dakota, was the advent of the technique known as hydraulic fracking. Last year, the state’s oil production was more than six times what it was in 2008 — despite the bust.

The adoption of fracking prompted companies to pour $30 billion into the region before the downturn. An oil rig is the epitome of a big-time investment: The 13-story, 275-ton movable, mechanical beasts cost about $50,000 to $70,000 per day to operate.

There are now 51 drilling rigs in North Dakota — well below the high of 218 in December 2012 — but up from a low of 27 in May 2016.

They run 24 hours a day, with workers usually putting in 12-hour shifts. As supervisor, Punteney must be constantly at the drilling sites nestled in western North Dakota’s rolling hills. His “living shack” is adjacent to a makeshift office, and he works two weeks on, two weeks off.

On a recent spring day, the rig was drilling three new wells at a site that already hosts three of WPX’s 248 wells in North Dakota. Each of the six wells will reach down 2 miles, then veer horizontally for another 2 miles, the signature pattern of shale oil fracking.

“With six wells, you have a spider web beneath you,” Punteney said.

A native of Wyoming, Punteney started out in the oil business as a pumper — a grunt worker at a well site. Last fall, he was hired by WPX, a company that focuses on U.S. shale oil and gas production. WPX had five rigs operating in North Dakota before the bust, but then cut back to one. It added a second late last year after raising its capital spending budget. Other producers have been doing the same.

With investment rising, oil field employment seems to have turned a corner this spring. In April, the North Dakota job sector that mostly includes oil and gas workers stood at 16,400, up 10 percent over the same month in 2016. April marked the second consecutive month of year-over-year increases in oil jobs.

Meanwhile, online job openings were at a 12-month peak in April — and up 94 percent over a year ago — in “construction and extraction,” which includes oil field employment in North Dakota’s four largest oil-producing counties, according to Job Service North Dakota. Active resumes for those jobs were down 52 percent over a year ago, indicating an imbalance between oil jobs and job seekers.

“Companies are not keeping up in hiring,” said Ron Ness, president of the North Dakota Petroleum Council, a trade group. “We are probably looking for 1,000 employees in Williston, Dickinson, Minot and Stanley to fill the needs.”

Ness said the improving U.S. economy and lower unemployment rates generally aren’t helping. “This will be a long-term problem because the entire labor market is pretty tight,” he said.