November 2, 2011

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In This Issue
Bakken Summit
Dark side of the oil boom
A baby Bakken? Tyler Formation seems to promise big oil
Helms urges southwest to prepare for wave of oil production
Stark county mill request for housing grants denied
Higher prices boost Big Oil third quarter profits
Dickinson sees hiring problems
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Bakken Summit

 

The second annual Bakken Infrastructure Finance and Development Summit was held in Denver October 24-26.  Presentations were made regarding: Bringing Bakken Oil and NGL's to Market; Existing Midstream take-away Capacity from the Bakken; Power Generation to Satisfy growing Drilling Activity in the Bakken; Infrastructure Investment Opportunities for Capital providers; Keynote by Governor Dalrymple; Outlook on the Truck and rail Infrastructure needed to Support the Expansion of the Bakken Play; How to Secure Sufficient Manpower; how to Overcome Community Challenges related to Drilling Activities and Real Estate Opportunities

 

 

Dark side of the oil boom

  

While businesses in the state continue to feel the prosperity, the oil boom is bringing, some nonprofits are feeling a squeeze because of increased need for their services.  

 

Many nonprofits receive federal funding, and because of economic troubles across the country the federal government has cut funding to many social programs.

 

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A baby Bakken? Tyler Formation seems to promise big oil

 

North Dakota's booming oil patch is sweeping down to South Dakota, amid speculation that a reservoir similar to the rich Bakken shale formation could contain millions of barrels of crude.

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Helms urges southwest to prepare for wave of oil production

 

Oil and Gas director Lynn Helms, right, talks with Mike Dukart, who is organizing a mineral owners cooperative in the Hettinger County area. Helms gave a presentation on the tsunami of oil development headed Hettinger County's way to about 130 people.

 

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Stark County mill request for housing grants denied 

 

Money - or the budgeted lack thereof - was a hot topic of debate Tuesday at the regular meeting of the Stark County Commission. Stark Development Corp. asked the commission to restore the Stark County Jobs Development Authority's two mills of funding, but the commissioners said the 2012 budget was set. In that budget, the JDA's funding was lowered to one mill, or $75,600 of property tax funds. At Tuesday's meeting in the Stark County Courthouse, SDC's executive vice president, Gaylon Baker, requested two mills so the corporation could use the money for grants on housing in western North Dakota. JDA has received two mills for quite a while, JDA Chairwoman Linda Steve said. JDA contracts its mills to the SDC, which uses the funds for its programs to help develop jobs in Stark County. "Gaylon was trying to explain that a decrease ... is really significant," Steve said. Baker said SDC realized in 2010 that housing would become an issue because of an oil boom in North Dakota, and that issuing grants and building housing could decrease rent. Commissioner Duane "Buck" Wolf asked how building more houses would lower rent prices. Baker used the supply and demand theory. "We are trying to add supply so the supply and demand balance is better so that rents don't elevate as much as they would if we did not have that supply," Baker said. "If you don't have those supplies you are out of the ball game." The commissioners denied the request without a vote. However, they did invite JDA and SDC to come back next year. "We did project our oil revenue very conservatively," Wolf said. "There is certainly room if the situation continues like it is and our oil revenue continues to pick up." Baker thanked the commissioners and said he would come back before next year's budget is approved.

 

Source: The Dickinson Press

 

Higher prices boost Big Oil third quarter profits   

 

Higher oil prices have masked a slowdown in production among the biggest oil companies. Exxon Mobil, Royal Dutch Shell and BP reported a surge in quarterly profits this week even though they're producing less oil from fields around the world, including a combined 7 percent decline in the third quarter that just ended. Each company has devoted billions of dollars to finding new petroleum deposits, but it could be years, even decades, before those investments translate to more oil and natural gas. Experts say smaller companies will need to step up to satisfy growing world demand. China, India and other developing nations are expected to push the global appetite for oil to a record 90 million barrels per day next year, enough to outstrip supplies. Three years ago, a severe drop in oil supplies helped push oil prices to above $147 per barrel, saddling airlines and shipping companies with high fuel costs. Gasoline prices soared above a national average $4 per gallon. "We're not at the point where oil prices are going to go bananas" and spike like they did in 2008, said Ken Medlock, an energy expert at Rice University. "But if we saw production declines like this for five or six years, then it's time to worry." Big Oil's third-quarter financial results highlight a growing problem within the industry. New petroleum sources are increasingly tough - and expensive - to find. The best new deposits are found more than a mile under the ocean, or in vast layers of sticky Canadian sand, or in the frigid Arctic. Costs have increased dramatically as the industry digs deeper. A decade ago, tapping a new well cost about $10 to $20 for every barrel of oil produced. Now it's estimated at about $50 or $60 for wells in the Gulf of Mexico and $70 or $80 in the Canadian oil sands. To boost production, oil companies not only must find new sources of oil, they need to make up for production losses at aging fields. Exxon's fields, for example, are declining by 5 to 7 percent each year, Oppenheimer & Co. analyst Fadel Gheit said. "They need to add 200,000 to 300,000 barrels a day of production just to break even," Gheit said. "That's huge." Exxon hasn't been able to keep up this year. Its oil production fell 7 percent in the July-September quarter. Some of the declines resulted from deals that limit the amount of oil Exxon can sell as prices rise on international markets. Excluding those limits, however, production was still flat. From January to September, the company produced an average of 2.33 million barrels per day - the smallest daily amount since at least 2005. Other oil majors aren't faring much better. BP said oil production dropped 10.6 percent in the quarter to 2.08 million barrels per day. Shell said oil production fell almost 2 percent in the quarter to 1.68 million barrels per day. Overall, analysts think oil producers can still increase supplies in coming years, thanks to smaller companies and increased contributions from OPEC. But it may not be enough to keep up with demand. Morgan Stanley analyst Hussein Allidina expects supplies to rise by about 1-2 percent every year until 2016. That assumes "flawless execution," Allidina said in a research note. Even if that happens, demand will grow 1.5 percent every year over the same period. It raises the possibility of price spikes. A surge in oil not only means higher fuel prices, it also poses problems for the industry. The record jump in oil prices in 2008 may have led to record profits for Exxon that year, but it weakened the economy so much that prices eventually plunged. That sapped profits in later quarters and forced the industry to table many projects. As oil production declines from the industry's biggest players, smaller companies are expected to chip in by ramping up in fields that are too tiny for Big Oil. For example, Los Angeles-based Occidental Petroleum Corp. said it has increased oil production about 4 percent so far this year. Saudi Arabia and a handful of other OPEC members have the ability to put more oil on the market, if needed. And Libya is expected to start exporting oil again later this year following an eight-month rebellion. Exxon Mobil Corp. on Thursday said profits jumped 41 percent in the third quarter to $10.33 billion, or $2.13 per share, as higher oil and natural gas prices made up for lower production. Profits doubled for Shell and BP for the same reason. Chevron Corp., the second-largest U.S. oil company, is expected to report its financial results on Friday. Exxon sold oil in the U.S. for an average of $95.58 a barrel, up 35.2 percent from a year earlier. Internationally, it charged $107.32 a barrel, up 45.4 percent. It also charged more for natural gas. The higher prices propped up earnings at Exxon's exploration and production business, which finds and pumps oil and natural gas. Exxon's U.S. refineries also benefited. Their profits quadrupled as demand for gasoline and other fuels soared around the world, enabling them to charge more. Exxon shares rose 81 cents, or 1 percent, to $81.88. BP shares climbed 78 cents to $45.43. Oil prices also jumped 4 percent to end the day at $93.96 per barrel in New York.

  

Source:  The Dickinson Press

Dickinson sees hiring problems

 

Dickinson is seeing tremendous growth, officials said, forcing the city to hire more employees and make new positions. City Administrator Shawn Kessel said 10 positions may need to be filled by the end of the year. The Dickinson Civil Service Commission met at Dickinson City Hall on Monday to discuss several opened positions and hiring rosters. Increased oil production has caused the city to grow, Kessel said. The city needs more employees to handle the increased workload. Certain hiring problems come with the growth. Competing with private-market wages is an issue, Kessel said. The city can only pay employees so much. "How we compete instead is by benefits," Kessel said, adding the city offers four-day work weeks and indoor work. Finding eligible applicants can also be an obstacle. Some employee hopefuls don't meet the requirements for the desired position. Some applications are thrown out because they are incomplete. An applicant under review at the meeting had filled out his general information and educational information but left the rest of it blank. "It's possible he didn't have any job experience, but he didn't list any references," Commissioner Ronald Lisko said. "There's really nothing to go off of." Candidates are also required to undergo testing during the hiring process. "When there are applicants out of the area and we call them up and say, 'We have a test and you have to take it,' that can deter them," said Kristi Cianni, assistant to the city administrator. Kessel said it is all part of finding the best candidate for the job. "A lot of frontline people, especially in our civic works department, they have a skill set that is very desirable," Kessel said. "The demand for those skills is very strong, so it is very hard to find qualified applicants." City officials have also decided to create a human resource coordinator position. Kessel said it is ideal to have one human resource position for 100 employees, but the city is reaching 130. Kessel said he is taking on a lot of the duties for human resource, adding it is a position that is needed. "It looks to me we could have more (employees) as our community grows," Kessel said. "I think we are at the point where having someone who is a professional in (the human resource) position is going to be beneficial for everyone."

 

Source:  The Dickinson Press