Addressing Impacts in Western Communities Geoff Simon Williston - PowerPoint PPT Presentation

Addressing Impacts in Western Communities Geoff Simon Williston Basin Petroleum Conference Bismarck, ND May 22, 2018

The First Boom Happened Quickly • Within two months of the 1951 Iverson oil strike, 30 million acres were under lease. • By 1952 , Standard Oil of Indiana was building a 30,000 barrel per day refinery near Mandan. – Forty-two oilfield service and supply companies had opened offices in Williston. – In June 1952 Service Pipeline Company announced it would build a pipeline to the Standard refinery. • The earliest producing wells of the Bakken shale formation were drilled in the 1950s on Henry Bakken’s farm less than five miles from the Iverson No. 1 well. 2

Production Tax Enacted 1953 (in lieu of property taxes) 3

Need for Local Share Recognized -- Excerpt from 1953 report of Legislative Research Committee 4

Interim Study of Hub City Funding • Hub City topic assigned to Energy Development & Transmission Committee • Public input hearings and committee tours conducted in Williston, Dickinson and Minot • Additional committee discussion regarding industry impacts in the Big Four producing counties 5

WDEA Interim Study Support • Hub City Study – updated last year’s Six-City Study, and expanded to include Minot • Worked with AE2S Nexus to assist cities with tours and presentations in each Hub City • Developed 4-County Study to support effort to re-write GPT distribution formula • Partnered with NDPC on research project to identify historic expenditures of oil tax revenue 6

Key Findings of Hub City Studies • Competition – While price of oil often dictates activity by employers, quality of life and cost of living dictate activity of workers – ND is in competition with other plays for workforce : • Permian • Eagle Ford • Haynesville • Niobrara • Scoop/Stack • Marcellus 7

It’s happening in other plays too 8

It’s Expensive to Live in North Dakota Cost of Living Index* 124.2 117.2 115.1 112.6 105.4 104.4 104.2 100.5 97.7 94.5 87.8 Ft. Collins, Watford Williston, Dickinson, Minot, ND Gillette, WY Greeley, CO Casper, WY Midland, TX Odessa, TX Norman, OK CO City, ND ND ND 9

Total Debt Load / Debt per Capita AFFORDABLE | COMPETITIVE | ATTRACTIVE COMMUNITIES TOTAL DEBT (MILLIONS) DEBT PER CAPITA $340 $12,865 $267 $10,093 $4,016.65 $104 $92 $63 $3,094 $1,764 $2,650 $39 $79 $2,710 $2,773 $1,370 $1,616 $5 $73 $351 $394 $34 $26 $6 $14 $383 $1,034 - - - - 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018 WILLISTON DICKINSON MINOT WILLISTON DICKINSON MINOT Assessment Debt Other Debt Assessment Debt Other Debt

Hub City Projected Growth (2017-2023) (Moderate Oil & Gas Activity) POPULATION & GROWTH PROJECTIONS MINOT WILLISTON DICKINSON ANNUAL POP. ANNUAL POP. ANNUAL POP. GROWTH GROWTH GROWTH 2.0% 2.8% 3.5% INFRASTRUCTURE INFRASTRUCTURE INFRASTRUCTURE MILES MILES MILES 23.5% 19.0% 12.7% UTILITY ACCTS. UTILITY ACCTS. UTILITY ACCTS. 24.1% 19.4% 12.8%

Major Revenue Source Projections REVENUE DICKINSON WILLISTON MINOT 100 100 100 90 90 90 80 80 80 70 70 70 Millions ($) Millions ($) 60 60 60 Millions ($) 50 50 50 40 40 40 30 30 30 20 20 20 10 10 10 0 0 0 2017201820192020202120222023 2017 2018 2019 2020 2021 2022 2023 2017 2018 2019 2020 2021 2022 2023 *Water, Sewer, Storm, Refuse

Need to Invest in our Communities • Further projected population increases will place additional service demands on each city • Hub Cities have made required, smart, and prudent investment through the boom • Hub Cities have tall task of maintaining an affordable quality of life and cost of living • Future investment needs will keep pressure on cities to maintain affordable tax/fee levels • GPT/Hub City funding is a critical tool 13

Four-County Impact Analysis • Dunn, McKenzie, Mountrail and Williams currently produce 92% of the oil in North Dakota • Significant oil and gas tax revenue generated in a small geographic area to benefit the entire state • Huge Industry Impacts – GPT Revenue is Essential – $987 million in road needs funded since 2010 – $230 million in capital facilities since 2014 • Corrections Centers - 170 new beds in 4 County Region • Public Works Facilities: to accommodate staff, fleet, and increased demand for county services • Courthouse Needs: Significant Additions and Renovations 14

Oil Production - Big Four Counties PERCENT OF OIL PRODUCTION Dunn McKenzie Mountrial Williams Remaining State 73% 66% 70% 60% 45% 50% 41% 40% 37% 37% 35% 40% 33% 33% 32% 28% 28% 26% 25% 24% 30% 23% 23% 21% 20% 20% 19% 19% 19% 17% 17% 17% 16% 16% 16% 16% 16% 16% 15% 15% 15% 15% 14% 14% 20% 14% 14% 14% 13% 13% 12% 12% 11% 10% 10% 9% 9% 9% 9% 8% 8% 7% 10% 5% 4% 2% 1% 0% 2 00 6 2 0 0 7 20 0 8 2 0 0 9 2010 2011 2012 2013 2014 2015 2016 2017 15

County Personnel Needs Exploded Historical Staffing Growth 300 Growth Since 2010 273 261 259 250 238 Dunn: 31% 234 211 207 204 200 McKenzie: 225% 184 167 163 Mountrail: 72% 150 148 140 129 120 Williams: 84% 113 111 108 100 97 94 93 93 92 88 87 86 83 75 73 73 72 70 67 58 56 50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Dunn McKenzie Mountrail Williams 16

Truck Traffic Drives County Costs 2017 Budget Expenditures 17

UGPTI Road Needs 2017-2036 18

Counties Build Industrial Roads Capital Improvement Plan – McKenzie County 19

Population will continue to grow 20

Four-County Needs Summary • On-going development of oil and gas in the 4 Counties • Further production increases expected with increased price and efficiency in the drilling process that will impact all oil and gas producing counties • Significant past investments have been made and GPT has been an essential resource to meet the need • Moving forward, large infrastructure demands remain in oil and gas producing counties • To meet this demand - GPT will continue to be critical tool for oil and gas producing counties moving forward 21

Senator Wardner’s GPT rewrite

As Price Climbs, Impacts Will Grow • Drilling and production technology has improved • Wells drilled in half the time, so current 62 rigs can drill nearly 150 wells/month • If $60 is the new $90, then $70.00 = $105.00/bbl • “Bakken Premium” comes back into play, construction costs 23

Contact Information • Geoff Simon geoff@ndenergy.org 701-527-1832 (mobile) Additional study details at https://ndenergy.org/News/GPT-Study 24