NDIC To Incentivize DUC Completions -- October 23, 2020

NDIC  to incentivize DUC completions, from Geoff Simon's top ND energy stories today:

Members of the North Dakota Emergency Commission today approved a plan to repurpose $16 million in CARES Act dollars for a program that will encourage oil well completion.

The proposal was developed by the Bakken Restart Task Force to incentivize the completion of DUCs - drilled but uncompleted wells - in the Bakken. Lynn Helms, director of the Department of Mineral Resources, said the program would provide up to $200,000 to offset the cost of the water that is used in the hydraulic fracturing process to bring the wells into production. Helms said the task force focused on water because it is the primary component in fracking that benefits North Dakota-centric companies.

Helms said at the current rate, about 80 new wells would be completed by year's end. He said the incentive will produce 80 additional completions, and he expects there will be plenty of companies with DUCs that will claim the incentive.

There are not enough well completions occurring to maintain the state's current 1.2 million barrel per day production. But Helms said the 80 additional wells should stabilize production well into 2021.

Helms said each new well completion will generate an average of $1.6 million in production and extraction taxes, $150,000 in sales tax revenue, $1.1 million in salaries, and $2.4 million in royalties.

"I think it's probably pretty safe to say this has got the highest return on investment of any of the dollars we've spent out of the $1.25 billion (in CARES Act dollars) because this is money we get back and a lot more that will help us when we're trying to balance budgets in the biennium that's in front of us," said Governor Doug Burgum, who chairs the Emergency Commission.