In downturn, North Dakota's oilfield firms jostle for tiniest of jobs

Wed Aug 19, 2015 3:23pm EDT
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By Ernest Scheyder

WILLISTON, N.D. Aug 19 (Reuters) - Oilfield service companies eager for work amid plunging crude oil prices have until the end of Wednesday to bid for a guaranteed job: plugging a North Dakota well abandoned by a producer closing up shop in the No. 2 U.S. oil patch.

Whichever oilfield service company does the plugging, be it Halliburton Co, Schlumberger NV or another firm, the job could bring in more than $20,000.

While that's far less than the millions they have received to drill and fracture wells in years past, the more-than 70 percent drop in oil prices since last summer means no job is too small.

Oil producers are delaying fracking jobs at roughly 850 wells throughout the state, according to data from regulators, harming profitability throughout the oilfield service industry and fueling layoffs.

Amid that slump, North Dakota officials last year confiscated Rio Petro Ltd's Sundhagen #1 well in Williams County, near the state oil capital of Williston.

The reason: Rio Petro did not notify regulators about work done on the well, a violation of state law. Nor did it increase the required bonding on the well, aimed at covering the cost of its reclamation, to $50,000 from the previously required $20,000. The privately held company also did not respond to the state's inquiries.

"Since they did not respond, we are basically confiscating the well," said Alison Ritter, spokeswoman for the state's Department of Mineral Resources.

The well has never been prolific, producing only 55,569 barrels since it first came online in 1980, according to state data.   Continued...