Only 267 days ago slightly fewer than nine months Minot was at the center of a budding love-fest between northwestern North Dakota and the petroleum industry.
Thousands of industry insiders joined local, state and federal dignitaries at the Williston Basin Petroleum Conference and Expo, where the state proudly announced that 2.1 billion to 2.6 billion barrels of oil could be recovered from the Bakken Formation.
Oil prices were at $120 per barrel and climbing, meaning the state could very well be perched atop at $300 billion-plus mineral bank account.
High-paying jobs were so abundant that industry pundits screamed from the rooftops that anyone who could pass a drug test and write their name could make $55,000 to $80,000 right off the street.
Unfortunately, it looks like the honeymoon might be over. By this past Thursday, oil had dropped to $35.10 per barrel, and one major employer, Nabors Drilling USA of Williston, had announced it would begin laying off workers. Halliburton Energy Services also told the Associated Press that "there will be positions eliminated," but declined to elaborate.
Did the drop in oil prices begin the death knell for the oil boom whose fuse had just been lit?
DJ McIntyre of Job Service North Dakota's Minot office said Thursday the office was seeing a slowdown in oil companies' hiring caused by the challenging economic climate, but that she wasn't ready to hit the panic button just yet.
"We definitely are (seeing a bit of a slowdown), yes," McIntyre said. She was careful to point out that she doesn't want to speak for the oil companies, however. Nonetheless, she was able to make observations based on recent developments.
"Most of (the companies) seem to think it's a temporary stall out," she said. "But some of them are still going strong."
She said that she was seeing that slowdown reflected in the number of jobs being advertised at Job Service ND, but that she didn't think it was reflective of a long-term trend.
"No, we aren't feeling that way right now," she said.
Locally, jobs should still be available for some time, she said.
"Lots of the people coming in to take those jobs were from out of state," she said. "The prospects for employment for our local people have not changed a lot."
Nationally, according to U.S. Department of Labor statistics, job openings in natural resources and mining fell by nearly 30 percent from October 2008 to November 2008.
The downturn in labor demand is a symptom of an overall decline in demand for petroleum. The American Petroleum Institute said Thursday that total U.S. petroleum demand has shrunk to its lowest level since 2003. The decline is attributed to the combined effects of higher prices early in the year and a weakening economy as the year progressed, according to an API press release.
For the year, U.S. petroleum deliveries dropped by 6 percent. Petroleum deliveries are utilized as a measure of demand, and that drop in demand reflected the largest rate of decline since 1980. Gasoline, diesel, residual fuel oils and jet fuel all plummeted in demand levels, with residual fuels falling more than 14 percent.
"All told, the magnitude of the drop in U.S. petroleum demand, which totaled more than 1.2 million barrels per day, was enough to offset the continued demand gains in developing countries around the world," said Ron Planting, statistics manager for API.
This drop in demand coincided with a drop in domestic oil production, with U.S. crude production falling below 5 million barrels per day for the first time since 1946. North Dakota bucked that trend however, with projections made in November 2008 that the state would be producing nearly 380,000 barrels per day by 2010. At that time, the state was already producing more than 185,000 barrels per day and was ready to pass Louisiana as the nation's No. 4 oil producer. At that same point in November 2008, Lynn Helms of the North Dakota Department of Mineral Resources said 96 drilling rigs were active. As of Thursday, according to the department's Web site, that number had dropped exactly 25 percent to 72.
Part of the national decline in production was due to a decline in Alaskan production, and another part was due to hurricanes Gustav and Ike.
The combined total of crude oil and product imports dropped to the lowest level in five years at 12.9 million barrels per day. Crude itself dropped 2.2 percent to fewer than 10 million barrels per day.
Ron Ness, president of the North Dakota Petroleum Council, said Thursday he is concerned about the effect of falling prices, but he is not aware of any developing trend for widespread layoffs in North Dakota's oil industry.
"Nabors is obviously a very large employer," Ness said. "There have also been a number of land companies that have had their work reduced, thereby reducing staff.
"But without contacting the individual companies, I have not heard what all is taking place."
However, he indicated that by tracking the declining number of drilling rigs at work in the state, one could infer obviously that a slowdown in activity is either on the way or is here already. Compounding the situation is the fact that the Bakken play is an expensive one to go after, with wells costing upwards of $5 million each.
At those kinds of cost levels, should the price of oil not rebound fairly soon, it will likely get worse before it gets better.
"Certainly, we continue to be very concerned about the economics right now, and the availability of capital is making the Bakken difficult," Ness said. "This is a commodity based business, there's no doubt about it."