When it comes to determining what has happened to employment in the Bakken, given the drop in oil prices and oversupply in the market, the big news is not that these local economies started to decline, but that they have not declined more, reports Paul E. Polzin, director emeritus, at the Bureau of Business and Economic Research at the University of Montana. Why haven't the declines been more like earlier energy busts, such as the mid-1980s? quizzed Polzin, in writing for the Montana Business Quarterly. Employment decreases from January 2015 to March 2016 was about 16 percent in Richland County Montana and roughly 38 percent in Williams County North Dakota. Both are still well above their pre-boom levels of January 2011. Plummeting oil prices have led to an almost complete cessation of drilling activity in the Bakken and other oil producing areas of the country. Even so, oil continues to be extracted from existing wells, meaning continued employment for workers. Declines in other support industries, such as trucking, have been even less. While continued production has buoyed employment, the current situation cannot continue indefinitely, said Polzin. There cannot be a continued extraction of oil without a resumption of drilling. Even though shale wells have a very long tail where production continues, but at a very small volume - sooner or later the existing wells will run dry. But there's a good chance that oil prices will rise once again and they may not have to rise very much for the Bakken to come back into production. Polzin said that most experts believe that oil prices will once again turn upward as worldwide demand grows and existing reserves of oil diminish. Exploration and drilling will resume first at the most cost effective sites, which will probably include the Bakken. Because of the belt tightening and squeezing out of inefficiencies that have been going on, costs of production in the Bakken have dropped significantly compared to just five year ago. The North Dakota Department of Mineral Resources estimates break-even prices on the best sites in the state to be about $29 a barrel. The Bakken is well position to benefit early from increased activities, wile large capital intensive projects in the Arctic, deep-water drillings and the tar sands may be much further down the list. Resumption of drilling activity in the Bakken means a great deal to most of Montana's economy and related jobs, as well. Vendors in Montana that serve the oil industry have been estimated at 224 located in 36 of Montana's 56 counties. About 49 of the vendors are located in Billings. The number of workers estimated to commute from Billings to the Bakken was estimated by the US Census Bureau at about 229.
- Written by Press Room