October 1, 2015 – NGI’s Shale Daily
North Dakota Likely to Let Operators Delay Well Completions, Official Says
By: Richard Nemec
As they have already done for flaring, North Dakota officials are considering relaxing their one-year deadline for operators of newly drilled wells to complete them or face loss of permits and the need to plug the well.
Read the full story here: http://www.naturalgasintel.com/articles/103866-north-dakota-likely-to-let-operators-delay-well-completions-official-says
In an analysis Tuesday, RBN Energy LLC's Sandy Fielden predicts the number of drilled but not completed wells in North Dakota likely will continue to increase, "effectively storing the oil underground for later production when prices improve." Shutting down incomplete wells and plugging them permanently at $200,000/well doesn’t benefit the state, according to Fielden and Helms.
With four years of significant tax revenues from the Bakken Shale boom, North Dakota political leaders have done all they could to keep producers happy, Fielden said. Existing laws include "triggers" that reduce or eliminate extraction taxes on oil/gas producers when the price of crude stays below a benchmark ($57.50/bbl) for a set time period.
Fielden said that the strategy of holding drilled-but-incomplete wells works best for producers with deep pockets. Smaller firms with shorter credit lines cannot always afford the high upfront cost of drilling wells without completing them to generate cash flow, no matter how hard the prices look. The number of incompleted wells in North Dakota has totaled more than 900 in recent months and the number of wells nearing their one-year anniversaries also is increasing.
