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Oil Market Crash Raises Concerns about ND Wells

State officials in North Dakota recently estimated that oil production across the region was down nearly 300,000 barrels a day following the market crash. (Adobe Stock)
State officials in North Dakota recently estimated that oil production across the region was down nearly 300,000 barrels a day following the market crash. (Adobe Stock)
April 30, 2020

BISMARCK, N.D. -- The oil market crash has created a wave of concerns in North Dakota.

In addition to economic damage, environmental groups worry about what happens to the glut of oil sitting in storage.

North Dakota is among the top five oil-producing states in the U.S., but state officials say several thousand wells have shut down and storage is at near capacity.

Fin Dooley, a member of the Dakota Resource Council, says there's long-term concern about abandoned well sites if companies go bankrupt. He says state regulators need to hold them accountable for cleaning up sites that go out of service -- or he fears North Dakota might encounter the same troubles once seen in Oklahoma.

"North Dakota, I think, has more good soil than Oklahoma does," he states. "You know, a lot of what is left in north central Oklahoma is in the wheat belt. A mess all over -- pipes, steel."

North Dakota requires oil companies to buy insurance bonds to cover such expenses. But Dooley contends they're nowhere near what's needed to pay for cleanup costs.

The Department of Mineral Resources says the state recently adopted some reforms to the bond program, including a decision that doubled the bond prices of certain wells.

Lynn Helms, director of the North Dakota Department of Mineral Resources, says a special state fund to help cover cleanup costs currently sits at around $26 million.

Helms says he doesn't know if that's enough to cover the anticipated wave of abandoned sites. But he says his department is talking with the federal government about getting stimulus funds -- and the state has another course of action.

"Laws are in place for the state to confiscate all the equipment and any salable oil, and to sell that," he states.

But some activists say that might be a moot point if there's no market for surplus oil.

Meanwhile, there had been talk at the state and federal level of providing financial aid to the oil industry. But Dooley worries that would only benefit a select few, at the top.

"I'm not concerned about the investors -- they all know what they're doing when they make a risky investment," he states. "But I am concerned about the workers, the communities, the small contractors."

North Dakota State University researchers say the industry employs more than 35,000 people across the state.

Disclosure: Dakota Resource Council contributes to our fund for reporting on Climate Change/Air Quality, Energy Policy, Environment, Rural/Farming.
Mike Moen, Public News Service - ND