Western North Dakota Energy Project Shale Projection Webinar Series

2014 Regional Updates

An Initiative of theStrom Center at Dickinson State University

AcknowledgmentsOur Analysts:

Lynn Helms, ND Dept of Mineral Resources

Justin Kringstad, ND Pipeline Authority

Dean Bangsund & Dr. Nancy Hodur, NDSU

Our Funders:Bush Foundation

Vision West ND

US Dept. of HUD Regional Sustainability Planning Grant

Our Moderators:Dr. Dick Gardner

Senior Fellow, RUPRI Center for Rural Entrepreneurship

Our Local Host & Coordinator: Deb Nelson, DLN Consulting

Lynn Helms’ Optimistic Scenario

Imagine a cone with the deepest part centered under McKenzie County with 5 pay zones…

Units on outer rings of cone have fewer economic pay zones & thus fewer wells

Spacing Units Wells per Unit Total Wells

1,000 19 19,000

1,000 15 15,000

2,000 11 22,000

2,000 7 14,000

2,000 2 4,000

8,000 74,000

Source, Lynn Helms, ND Division of Mineral Resources

Typical Well costs $8.7 MillionOver 45 years:

• Produces 600,000 Barrels• Generates $20 M in net profit• Pays $4,925,000 in total taxes• Pays $7.6 M in royalties• Pays Salaries of $2.1 M• Pays operating expenses of $2.4 M

Boom Duration:When will drilling & production begin to taper?

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North Dakota Drilling Rigs

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Total Producing Wells

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North Dakota Producing Wells

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Western North Dakota Well Projections

1,800 - 3,000 wells/year = 2,000 expected

150-250 rigs = 12,000 – 30,000 jobs

Another 10,000-15,000 jobs building infrastructure

10 wells/rig/yr increasing to 12 by 2015

200 rigs can drill the wells needed to develop spacing units in 18 years

35,000-40,000 more new wells

Recoverable oil = 7.5 Bbl USGS w 3ThreeForks

2,300 – 2,900 wells/year = 2,500 expected

~180 rigs = 20-25,000 jobs

Another 3,400 jobs building gathering systems

12.4 wells/rig/yr increasing to 14.1 by 2022

May take over 25 years to fully develop the 8,000 spacing units

45,000 – 74,000 total Bakken wells

Recoverable oil =10-14 Bbl Helms, 32-36 Bbl Continental Oil

2013 2014

North Dakota State University Model

• Consistent with Helms/Kringstad assumptions

• Rapidly changing technology & other variables led NDSU away from trad I/O models and into uncharted territory

• Most likely or medium, pessimistic or low, & optimistic or high scenarios

• Splits jobs into permanent vs transient

• Is more accurate at regional level

• Communities can affect the local distribution of opportunities, impacts, risks, and growth.

ADAMS

BILLINGS

BOTTINEAU

BOWMAN

BURKE

DIVIDE

DUNN

HETTINGER

MCHENRY

MCKENZIE

MOUNTRAILPIERCE

RENVILLE

SLOPE

STARK

WARD

WILLIAMS

VALLEY

GOLDEN

Region 2

StatePlanningRegion 2

State

Region 1

StatePlanning

Region 8

StatePlanning

Williston RegionMinot Region

Dickinson Region

Major trade centers

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ND Petroleum SectorTotal Direct Employment 2000 - 2039

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North Dakota Total Direct Employment

Petroleum Sector Consensus Scenario 2013

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North Dakota Total Direct Employment,

Petroleum Sector, Most Likely Scenario 2014

Temporary, Devel-opment Employment

Long-term, Per-manent Employ-ment

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ND Petroleum Sector Employment by RegionMost Likely Scenario

Minot RegionDickinson RegionWilliston Region

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Petroleum Employment % of Total Employment 2014

Dickinson RegionWilliston RegionMinot Region

Average Annual Population & Housing Growth (most likely)

Minot Region

Dickinson Region

Williston Region

Permanent Housing

2.6% 7.0% 11.5%

Permanent Population

2.4% 6.4% 11.2%

• Latest comprehensive projection of employment, housing, and pop

• Scenario of likely future; not precise prediction

• Last year’s medium scenario is this year’s low

• Taper doesn’t start until 2020-2030 (and then only levels off)

• Bakken in dynamic state of flux; projections, if to be used to continue planning, should be revised regularly

Conclusions

If you have further questions, please contact:

Deb Nelson, DLN Consulting

(701) 483-2801, deb@dlnconsulting.com

Dick Gardner, CRE & Bootstrap Solutions

(208) 859-8878, Bootstrap1@msn.com

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