NORTH DAKOTA ASSOCIATION OF OIL AND GAS PRODUCING COUNTIES
NDAOGPC Newsletter
September 27, 2013
In This Issue
Article 1 - Thank You for Making the 2013 NDAOGPC Annual Meeting a Success!
Article 2 - NDAOGPC Annual Meeting Recap
Article 3 - State Land Board Approves $8.8 Million in Law Enforcement Grants
Article 4 - Investors to Be Surprised by Bakken Oil Shale
Article 5 - Upcoming Events
Article 6 - Oil and Gas Stats
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The North Dakota Association of Oil and Gas Producing Counties (NDAOGPC) is the trusted and unified voice for the betterment of the citizens of North Dakota and the membership of the North Dakota Association of Oil and Gas Producing Counties. Through this newsletter we strive to provide accurate, up-to-date information surrounding the energy activities throughout the North Dakota energy producing counties.
Thank You for Making the 2013 NDAOGPC Annual Meeting a Success!
The 28th Annual North Dakota Association of Oil and Gas Producing Counties Annual Meeting was held Thursday, September 26, 2013 at the Ramada Grand Dakota Lodge in Dickinson, ND.

A record number of attendees took part in the event, which showcased NDAOGPC projects and activities, gave an update on oil and gas industry development, and provided a networking opportunity for NDAOGPC members from throughout the nineteen western ND counties.

Many thanks to all those who took advantage of this year's Annual Meeting and everyone who helped to make the event the success it was!

You can read more about the 2013 Annual Meeting in the article below.
NDAOGPC Annual Meeting Recap
Sen. Rich Wardner
ND Senate Majority Leader Rich Wardner welcomes 2013 Annual Meeting attendees to Dickinson.
Officials representing western ND counties, cities, and school districts were joined by oil and gas industry professionals, exhibitors, state and federal officials, and others interested in the activity of the ND Association of Oil and Gas Producing Counties at its Annual Meeting held this week in Dickinson. A wide variety of speakers at the event shared insight on Association projects, the scope of energy industry expansion in the region, and resources for adapting to the challenges of working and living within a rapidly evolving oil shale play.

EMS Coverage Study
Williston City Commissioner Brad Bekkedahl, the 2013 Annual Meeting Emcee, kicked off the event held at the Ramada Grand Dakota Lodge in Dickinson, ND. After welcome remarks from Dickinson City Commission President Dennis Johnson and ND Senate Majority Leader Rich Wardner, the group of over 120 people in attendance learned more about an emergency services coverage study that was commissioned by the NDAOGPC. Joel Quanbeck and Mike Schnetzer presented the results of that study, which found that there are two critical areas in western North Dakota that lack adequate EMS coverage. Described as the "worst of the worst" due to factors such as traffic accident numbers, location outside of the 14.7-minute EMS response area, population density, proximity to cities, and the number of ambulance runs, areas around Alexander and Mandaree emerged as the frontrunners in critical need of enhanced coverage. More details on the EMS Greatest Needs Analysis, conducted by Ulteig Engineers, is available by clicking the link.

Energy industry outlook panel at Annual Meeting
Members of the industry outlook panel listen to moderator Jim Arthaud as he introduces them to 2013 Annual Meeting attendees.
Oil and Gas Update - Lynn Helms
ND Department of Mineral Resources Director Lynn Helms, who traditionally has presented at NDAOGPC annual meetings, was unable to attend this year. Nonetheless, attendees were able to hear his message through a video recording created two weeks prior. Helms gave updates on activity within each of the state's oil play regions including the Red River, Bakken, Three Forks, Tyler, and Mission Canyon plays. That video is available by clicking this link.

Oil and Gas Gross Production Tax
State Treasurer Kelly Schmidt provided the answers to many questions related to the oil and gas Gross Production Tax (GPT) and how it was changed in the most recent legislative session. Distributions of GPT revenue to local political subdivisions based on the new distribution formula has just recently taken place. Treasurer Schmidt thanked the audience and the NDAOGPC for sharing information related to the new formula and communicating the changes that were made.

2013 Annual Meeting
Annual Meeting guests listen as Emcee Brad Bekkedah introduces the next guest speaker.
One issue that arose with the GPT distribution formula changes concerned distributions to townships. Treasurer Schmidt explained that "township" refers to a congressional township, i.e. a six-mile by six-mile section of land. As such, some townships may be located in more than one county, state, or even country when considering those along the border with Canada. Those townships straddling the border of two "participating counties" (i.e. oil-producing counties) are entitled to a single share of the 3% township pool distribution. The township pool is made up of the combined 3% GPT revenue from each of the counties receiving $5 million or more in total GPT revenue. Treasurer Schmidt went on to state that in townships straddling the border of a participating county and a non-participating county (or another state or country), the portion of the township within the participating county is entitled to a full share from the 3% township pool distribution. This distribution process was confirmed, she said, by a letter from the ND Attorney General dated September 25, 2013. More information on GPT distributions is available on the State Treasurer's website, www.nd.gov/treas.

Outlook from the Oil and Gas Industry
Energy industry representatives also had the opportunity to share information with Annual Meeting attendees. MBI Energy Services owner and CEO Jim Arthaud moderated the three-member panel, which discussed issues like road impacts, community engagement and investment, and oil taxation. Jack Ekstrom (Whiting Petroleum), Tim Butts (Continental Reources), and Terry Kovacevich (Marathon Oil) provided answers to many questions. The panel received some news coverage as well.

KX News - Oil Executives Give Outlook on Industry
The Dickinson Press - Whiting VP: ND should cut oil tax by half

Lunch Program
Dan and Tony at Annual Meeting
NDAOGPC President Dan Brosz presents a plaque of appreciation to Superintendent Tony Duletski for his years of service on the NDAOGPC Executive Committee.
During the lunch session, Bowman County School District Superintendent Tony Duletski was honored for his 10-year participation on the NDAOGPC Executive Committee. Tony's leadership and commitment to the goals of the Association were showcased, and he was presented a plaque to commemorate his dedication toward improving western North Dakota and the state. Thank you, Tony, for your service!

2013 NDAOGPC scholarship recipients were also recognized during the lunch program. Award winner Lucas Schaaf was able to attend and was recognized for his academic success. Schaaf is an electrical engineering student at NDSU and a Glen Ullin, ND native. He plans to pursue a career in oil or gas extraction when he graduates in 2015.

Dan Brosz
NDAOGPC President Dan Brosz reflects on the year from his perspective as chairman of the Association.
NDAOGPC President Dan Brosz closed out the lunch program by recapping the Association's activity over the past year. He spoke about the 2013 legislative session and how the western part of the state improved through adjustments to the GPT distribution formula. He also said that there remain several issues left to resolve. Adjustments to the GPT distribution formula remain to be made in the next session, particularly those distributions to school districts and hub cities. The 2013 Annual Meeting marked the end of President Brosz' term as the chairman of the NDAOGPC. Thank you, Dan, for your past two years of service and for your continued leadership in western ND.

Affordable Housing
The acting director for the Housing Finance Agency, Jolene Kline, presented information on the opportunity for affordable housing in the state. Capitalized by contributions from state taxpayers, the North Dakota Housing Incentive Fund (HIF) is a means for developing affordable multifamily housing for essential service workers and low- to moderate-income families. Kline provided details on 2013-2015 biennium HIF project awards, which as of the June 28, 2013 funding round totaled over $20.3 million. For more information on the Housing Incentive Fund, visit the HIF website at www.ndhousingincentivefund.org

ND DOT Update
ND Dept. of Transportation Director of Operations Wayde Swenson and Bryon Fuchs, NDDOT Local Government Division, discussed how the state and particularly the western portion of state have changed due to increased oil and gas activity. Traffic counts have risen substantially in the last five years, leading to heavy demand for improvements to state and local roadways. Swenson explained the funding package that was passed in the 2013 legislative session for road construction projects and gave an update on how those projects were progressing. Fuchs also talked about the Local Road Safety Program and how it is working to increase the level of safety on North Dakota's roads. Fuchs and Swenson's presentation is available here.

Business Meeting
One of the main items of business during the latter portions of this year's Annual Meeting was the approval of two resolutions, one thanking the City of Dickinson for its hospitality during the Annual Meeting and one opposing the proposed initiated constitutional amendment entitled the "North Dakota Clean Water, Wildlife and Parks Amendment". The proposed amendment seeks to create a trust with an additional 5% of oil and gas tax revenue, with no upper limit. This would be on top of the current 3% oil and gas tax revenue allocation to conservation efforts that was passed during the 2013 legislative session.

Superintendent Steve Holen was elected as the 2013-2015 NDAOGPC President.
McKenzie County Commissioner Ron Anderson introduced the resolutions and explained why the proposed constitutional amendment would be detrimental to Association members. If it's passed, he said, it will impact the amount of oil tax revenue available, and the needs of our citizens must be addressed. The group discussed the fact that the legislature has already appropriated up to $30 million of oil tax revenue for the 2013-2015 biennium, which is considerable funding for a new wildlife program.

Both resolutions passed and are available to read by clicking here.

Amendments were also made to the NDAOGPC Bylaws. Two members were added to the Executive Committee, increasing the number of Executive Committee members from nine to eleven. Those new members will represent the Coal Conversion Counties (CCC) of McLean, Mercer, and Oliver counties' political subdivisions. The two members that were selected by CCC membership to represent the CCC on the Executive Committee are Superintendent Mike Ness and John Phillips. For the complete amendments that were approved, please click this link.

After each of the County, City, and Education Committees held their individual committee elections, the newly elected Executive Committee met for a brief organizational meeting. Superintendent Gary Wilz was elected to replace Supt. Tony Duletski as a school representative on the Executive Committee. Mountrail County Commissioner Greg Boschee and Dan Brosz with the City of Bowman were both reelected to their Executive Committee seats. McKenzie County School District Superintendent Steve Holen was elected as the 2013-2015 President of the ND Association of Oil and Gas Producing Counties. Congratulations to the Association's new leadership team!

The ND Association of Oil and Gas Producing Counties also saw some general news coverage of its Annual Meeting, which you can view here
State Land Board Approves $8.8 Million in Law Enforcement Grants
Western North Dakota counties will see 28 new law enforcement-related employees after the Board of University and School Lands approved $8.8 million in grants Thursday.

For more information - TJ Jerke, The Dickinson Press

List of Awards Made

The Energy Impact Office will also be accepting grant applications from North Dakota's public school districts in oil and gas producing counties experiencing direct impacts from oil and gas development.

This grant round focuses on K-12 infrastructure needs to assist schools being impacted by oil and gas development.  Projects needing onetime funding to address the impacts, such as for developing affordable teacher housing, temporary portable classrooms to aid in dealing with expanding enrollment, impacted professional development training, technology needs, security improvements and other similar projects to address the impacts to school infrastructure are the focus for this grant round.

The State Land Board has set aside $5.6 million for this grant round.  Preference will be given to non-hub city school applicants. Applications will be accepted through October 18, 2013. For more information, visit the Enery Infrastructure and Impact Office website at www.nd.gov/energyimpact/.
Investors to Be Surprised by Bakken Oil Shale

North Dakota's Bakken shale formation will surprise investors, analysts at Goldman Sachs wrote in a note Tuesday.

 

"We came away from our trip to North Dakota last week with greater confidence in our outlook that Bakken production/completion activity will likely exceed Street expectations," the analysts said.

 

Goldman picked favorites among oil exploration and production companies exposed to the Bakken: they initiated coverage of Continental Resources Inc.  and Oasis Petroleum Inc., rating both a buy based on their growth potential and valuation. They set a price target of $130 on Continental stock and $65 on Oasis Petroleum stock.

 

Other firms ready to reap the Bakken benefits are refiner Northern Tier Energy LP, oilfield-services firm Halliburton Co., and transportation and pipeline companies Canadian Pacific Railway Ltd. and Enbridge Inc.

 

Northern Tier's price target was set at $30 a share, while Halliburton's target was $63 a share. Enbridge and Canadian Pacific's targets were 54 Canadian dollars and 144 Canadian dollars, respectively.

 

During the Goldman trip, producers and drillers were "uniformly confident" in resource expansion, efficiency gains, and potential for improving well performance in the coming years, the analysts said. Production "can continue to grow substantially," easing concerns that emerged after moderate growth in the first half of the year, they said.

 

"We see production growth of [130,000 barrels a day to 210,000 barrels a day] through 2016," above the average of 110,000 barrels a day for the six months to July, they said.

Goldman spread the love to other shale formations: U.S. oil production growth will be driven by Bakken, which straddles North Dakota and Montana, south Texas's Eagle Ford, and west Texas's Permian, they said. Colorado's Wattenberg, while also favored, will have less of an impact, they said.

 

For natural gas, the Marcellus Shale and associated gas from the above plays will be the drivers, they said.
Upcoming Events
October 6-8, 2013
Online registration is now open for the ND Association of Counties Annual Conference, scheduled for October 6-8 at the Ramkota Hotel in Bismarck. Visit the NDACo website at www.ndaco.org for more information and to register.

May 20-22, 2014 
The 22nd Annual Williston Basin Petroleum Conference will be held May 20-22, 2014 at the Bismarck Civic Center in Bismarck, ND. There have already been over 200 hotel rooms reserved for this conference. We recommend booking the hotel rooms that you need now. Conference registration opens on January 29, 2014.
Oil and Gas Stats

ND Petroleum Council Logo  

WTI Crude: $102.39

Brent Crude: $108.65

Natural Gas: $3.55

 

 

From the ND Petroleum Council's News Clips for September 27, 2013
Please take your time to review all materials and links provided for your convenience.  We will continue to provide you up-to-date information on upcoming events and news happening in North Dakota's oil and gas producing counties!

 

Sincerely,

 

Vicky Steiner
Executive Director

Brady Pelton
Deputy Executive Director

ND Assoc. of Oil & Gas Producing Counties