According to Reuters, the number of oil rigs in North Dakota fell to the lowest in more than a year in September. The operators sought to cut costs and increase efficiency. In fact, the commission’s data showed a huge drop in oil rigs across the entire Midwest.
The oil and gas industry is currently facing problems with escalating costs and regulatory concerns. The increase in cost and regulations could mean stalled growth.
“The combined effect of several factors has led to a noticeable slowing of activity and production growth,” Lynn Helms, director of the state’s Department of Mineral Resources, said in a monthly note.
Regulations mostly revolve around the controversy dealing with hydraulic fracturing techniques or “fracking.” Oil and gas companies have been using fracking techniques for decades. Recently, however, fracking has been at the center of debate, circling the media. North Dakota is home to one of the largest shale gas formation in a generation, and has become the second-largest oil-producing state in the country.
Due to the controversy and speculations, the EPA has investigated a number of event involving fracking including, water contamination and seismic activity studies. These uncertainties regarding fracking has certainly affected a number of wells in North Dakota, said Helms.
On one hand, the current administration empowers the Clean Air Act and encourage natural gas production, energy from shale. On the other hand, the Obama Administration could potentially regulate fracking, which would increase cost. State governments are currently responsible for fracking regulations.
North Dakota Republican Senator John Hoeven, along with Alaska Senator Lisa Murkowski, said on Tuesday that he will introduce a measure to “put states first in the regulation of hydraulic fracturing”.
The measure will “ensure that states retain the right to manage hydraulic fracturing and gives them the ability to respond first to any violation,” Hoeven said in a statement.