BILLINGS – Montana has been without a single major oil drilling rig since April, and industry observers attribute the inactivity to low oil prices that have slowed drilling across the country.
Montana drilling has been very limited during the Bakken oil boom, but it’s been decades since the state was without a single drilling rig.
State Board of Oil and Gas officials suspect that Montana might have been without a drilling rig in 2009, though Rep. Tom Richmond, R-Lockwood, said it’s been much longer since the state experienced a drilling drought. Richmond was Board of Oil and Gas director before retiring last year.
“We might have got close in 2009, but I’m thinking it was probably some time in the 1990s when it was zero,” Richmond told The Billings Gazette.
It’s possible there are a few very small operators who go uncounted.
Ben Jones, a petroleum engineer for the Board of Oil and Gas, said small operators who drill shallow wells with small equipment often go uncounted. However, the production of those wells can be as little as one barrel a day.
States keep weekly reports about intentions to drill, but the source to which many insiders defer is Baker Hughes. The drilling equipment company pioneered by Howard Hughes has been tracking drilling rigs since 1944.
According to Baker Hughes Investor Relations, Montana oil drilling flatlined in mid-March. The same month a year earlier Montana had six oil rigs. In the past 12 months, state oil rig numbers were highest in October, at 14.
Oil prices began to falter in October 2014, sending drilling into a tailspin globally. The rig count in neighboring North Dakota has slid from 189 in September 2014 to 76 this month.
However, oil production at current wells continues. Last December, Montana oil wells were producing 2.5 million barrels a month, Jones said. That production has continued into 2015, though numbers have slid because of the decline in new wells.
Employment in the northeast Montana portion of the Bakken is still strong though somewhat softer than a year ago, said Barbra Wagner, chief economist for the Montana Bureau of Labor and Analysis.
Unemployment is still around 2 percent in Bakken counties. Jobs in those communities tend to be tied to oil activity in North Dakota.
However, paychecks might not be as fat.
“We do show oil and gas extraction wages decreasing year over year in the total amount of wages paid,” Wagner said. “It could be that they didn’t lay people off in the fourth quarter, but they weren’t giving them overtime.”
Wagner projected a decline in the oil economy last year, as did the Minneapolis Federal Reserve.
The Montana Legislature mapped out its two-year budget with declines in oil tax revenue in mind.