Over the last few months, North Dakota has limped back from a pandemic low of just one frack crew operating in the state to eight this summer. But at the current cushy price levels, North Dakota would typically expect to house 20 to 25 frack crews, the state's top industry regulator told reporters Tuesday, July 20.
Though the numbers reflect "serious problems" for the fracking side of the oil business, North Dakota Oil and Gas Director Lynn Helms said the labor shortage is hindering all sectors of the state's core industry.
"They are trying with all their might to hire," Helms said of companies in the western North Dakota oil fields. "But they are not finding employees that want to come back into the industry and come back to North Dakota to work on the frack crews."
The pandemic tanked global oil prices in early 2020, driving many of North Dakota's transient oil field workers out of the state.
While North Dakota's rebound stagnated since last fall, other oil and gas states like Texas and New Mexico experienced stronger recoveries and an influx of workers. Texas has long been the biggest oil-producing state, while New Mexico has threatened North Dakota's status at number two in recent months.
North Dakota produced about 1.13 million barrels a day of oil in May, the latest production figures available, almost equivalent to output in the month before. New Mexico, meanwhile, has inched closer to North Dakota's production levels and has more than three times as much drilling activity in progress, Helms said.
Staying ahead of the southwestern rival "is going to be a severe challenge" at current drilling and fracking rates, he added.
Hydraulic fracturing, or fracking, is the process of injecting a mixture of water, sand and chemicals into newly drilled oil wells to stimulate production. The number of drilling rigs and frack crews serve as indicators of new production.
Helms said the stall in North Dakota's oil output came as a surprise since winter conditions had subsided by May, and oil prices have been on a consistent climb this year.
Reports to the Oil and Gas Division from oil field companies indicated many of the frack crews that left North Dakota headed for Texas, where the winters aren't as severe and the work is less seasonal, Helms said.
The worker shortage in the North Dakota Oil Patch comes as labor markets have tightened all over the country, especially in service sectors like the restaurant industry, hospitality and ride-sharing.
Helms pointed to an adverse political climate for oil under President Joe Biden's administration, as well as the federal unemployment benefits recently pumped into the economy, as hindrances to attracting workers. North Dakota's oil industry has historically taken off while other parts of the country were in recession, Helms added.
"I'm not sure what it's going to take. Obviously, it's going to take some incentives," said Helms, who added companies will likely have to offer higher wages and housing incentives if North Dakota is going to increase the number of frack crews by the two or three times necessary to get back on track with growth projections.
While oil production mostly plateaued in North Dakota in recent months, natural gas output grew slightly. North Dakota has limited infrastructure in place to capture natural gas, meaning disproportionate increases in gas production can result in more flaring that contributes to climate change.
North Dakota requires the oil industry to capture 91% of its gas, a benchmark it met narrowly in the latest production report.
Readers can reach reporter Adam Willis, a Report for America corps member, at [email protected]