Bakken boom trails into Billings

2013-12-22T00:15:00Z 2013-12-22T09:49:08Z Bakken boom trails into BillingsBy JAN FALSTAD Billings Gazette The Billings Gazette

Montana’s oil production held steady last year, but North Dakota pumped 60 percent more crude than in 2011.

And the sprint continues.

North Dakota is now the country’s No. 2 oil-producing state and Mineral Resources Director Lynn Helms predicts production will double again by 2017.

Sitting atop the deepest pool of Bakken oil, North Dakota is the geological winner in the Bakken game. But the economic ripples are becoming more visible in Billings.

“It affects everybody. It really does,” said Bob Dunker, owner of the Fly In Lube & Wash in Lockwood, where Bakken drivers provide nearly 15 percent of his business.

Last year was Dunker’s best year. So, this year he invested $1 million to double the size of his wash and lube shop. A big rig oil change at the Fly In costs $250 to $300 — half as much as in western North Dakota and there’s no two-week waiting period.

“They make a weekend of coming to Billings and they can save money,” Dunker said.

Companies from all over Eastern Montana have jumped into the Bakken building boom, constructing hotels, motels, truck stops, houses and restaurants. In turn, oil field companies and workers and companies buy RVs, homes and more in Billings.

Last year, Fiberglass Structures in Laurel sold more huge tanks to hold crude or wastewater from the hydraulic fracking process than it has in nearly four decades. This year is a bit slower, but after doubling his staff and quadrupling sales in three years, president Rob Harris is happy.

“Business may be 15 percent off, but when you come off a year like 2012, you welcome a slowdown because it gives you a chance to catch your breath,” Harris said. “And our suppliers say they are expecting 2014 to be as big or bigger than 2012.”

Seven years into the Bakken boom, oil producing and service companies are opening regional offices in Billings.

Two Houston players moved to town: Cudd Energy Services moved to Montana Avenue and ConocoPhillips leased a West End building to house about 70 professionals managing its regional oil and natural gas operations.

For now, the oil giant is focusing on North Dakota and letting other companies drill in Montana.

“If those turn out to be really good wells, we may get active (in Montana) again,” said ConocoPhillips’ Williston asset manager David Cook.

Denver-based Energy Corp. of America opened a Central Avenue office to ramp up drilling near Roscoe and Belfry and south into the Big Horn Basin of Wyoming.

Tom Richmond, administrator of the Montana Board of Oil and Gas, expected a flat year for new wells and production in Montana and that’s what happened.

“So far this year, we’re at 23 million barrels through October, so that’s going to be really close to last year, maybe even up a little,” he said.

But that’s good news, Richmond said, because you need to drill new wells to keep up production as older wells produce less.

Montana pumped 26.5 million barrels of oil last year, down from the peak of 36.3 million barrels in 2006.

Montana had 13 rigs operating in November, the same as last year with 10 drilling in the Bakken, according to the oilfield services company Baker Hughes. North Dakota had 165 operating rigs last month.

New drilling technology makes it possible to punch in wells between existing wells in the Elm Coulee field near Sidney, Richmond said, and there are some good wells around Bainville in Roosevelt County.

Early excitement two years ago about developing the Heath shale formation across central and Eastern Montana virtually stopped this year, after the initial wells proved uneconomical.

Onshore Holdings, a subsidiary of Norway’s state-owned oil company, Statoil, is drilling a Heath well near Sumatra.

And plans to drill near the Beartooth Mountains and along the Clarks Fork River flowing into Wyoming have stirred up local residents.

In October, ECA chief executive John Mork announced plans to develop up to 50 wells near Roscoe and Dean, and an undetermined number in the Big Horn Basin.

Residents concerned about traffic, water and the social consequences of a Beartooth oil boom started protest petitions and are holding meetings.

Despite the company’s big plans, ECA has applied for just a couple of well permits, Richmond said.

At the end of November, ECA applied for a permit to drill a wildcat well three miles east of Belfry, a project that was the subject of a hearing before the Montana Board of Oil and Gas on Dec. 12.

Richmond said the wells will be on the east and west flanks of the Beartooths.

“I don’t think anybody proposes to drill along the Beartooth front, other than in existing fields where there’s been activity for a century now,” he said.

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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