Around $16 million from the federal CARES Act will be used to frack and complete a number of oil wells in western North Dakota.
That money is being re-purposed from an original $66 million allocation for plugging and reclaiming orphan oil wells. $33 million went to plugging wells, and the other $33 million was for reclamation.
"We want to incetivize about 80 of those non-completed wells between now and the end of the year, in order to stabilize North Dakota's production at current levels," state mineral resources director Lynn Helms said in an interview. "That's so we can keep tax revenues flowing, we can keep jobs out tghere, and get people off unemployment."
Helms said the oil prices are now around $35 a barrel. But he says it would take $45 a barrel oil for wells to be completed. And he says it would take $55 for drilling rigs to get going. He says at $35, wells that had been shut in are coming back on-line.
Helms said if all 80 wells are completed, that should keep production stable in the Bakken for about 18 months.
"We think that, by this time next year, the price will be high enough to sustain fracking 'duc' (drilled, but uncompleted) wells on its own, without an incentive," helms said. "Within the following year -- by this time two years out -- prices should have recovered enough that drilling rigs will go back to work."
Helms said this program will benefit the small to midsize independent operators. He said four to five operators have already said they can line up about 67 wells – and he’s optimistic that 80 number can be reached.
Plugging continues, weather could hamper reclamation
Helms said the plugging of "orphan wells" will be completed by the end of the year. But he said the onset of winter weather will halt some of the reclamation effort.
"We think that we'll get, at best, half of the reclamation work done this year, and the other half -- about 174 sites -- is going to roll-over into next year."
Helms said the state has $26 million in the Abandoned Well Site Restoration Fund. And he said he’s working with North Dakota Congressman Keilly Armstrong (R) and New Mexico Congresswoman Xohcitl Torres Small, who have sponsored a bill to take North Dakota’s abandoned well program nationwide.
"Through the Department of the Interior, they are introducing a bill that would provide $25 million a year per state in grant money, to do exactly what we're doing in North Dakota with the CARES Act money," Helms said. "People took a look at this and said, 'This is a way for us to get ourselves out of the orphan well problem we have nationwide."