Geoff SimonWilliston Basin Petroleum ConferenceBismarck, NDMay 22, 2018

Addressing Impactsin Western Communities

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.

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Production Tax Enacted(in lieu of property taxes)

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1953

Need for Local Share Recognized

-- Excerpt from 1953 report of Legislative Research Committee

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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

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• Additional committee discussion regarding industry impacts in the Big Four producing counties

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

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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

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It’s happening in other plays too

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It’s Expensive to Live in North Dakota

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Ft. Collins,CO

WatfordCity, ND

Williston,ND

Dickinson,ND

Minot, ND Gillette, WY Greeley, CO Casper, WY Midland, TX Odessa, TX Norman, OK

124.2

117.2115.1

112.6

105.4 104.4 104.2100.5

97.794.5

87.8

Cost of Living Index*

Total Debt Load / Debt per Capita

$5 $73 - - $14 $26 $34

$267

$6 $79 $39

$340

$92 $63 $104

2008 2018 2008 2018 2008 2018

WILLISTON DICKINSON MINOT

TOTAL DEBT (MILLIONS)

Assessment Debt Other Debt

$383 $2,773

- -$394 $1,034

$2,710

$10,093

$4,016.65

$1,370 $1,616 $3,094

$12,865

$351 $1,764 $2,650

2008 2018 2008 2018 2008 2018

WILLISTON DICKINSON MINOT

DEBT PER CAPITA

Assessment Debt Other Debt

AFFORDABLE | COMPETITIVE | ATTRACTIVE COMMUNITIES

DICKINSON WILLISTON MINOTANNUAL POP.

GROWTH

3.5%INFRASTRUCTURE

MILES

23.5%UTILITY ACCTS.

24.1%

2.8%INFRASTRUCTURE

MILES

19.0%UTILITY ACCTS.

19.4%

2.0%INFRASTRUCTURE

MILES

12.7%UTILITY ACCTS.

12.8%

POPULATION & GROWTH PROJECTIONS

Hub City Projected Growth (2017-2023) (Moderate Oil & Gas Activity)

ANNUAL POP. GROWTH

ANNUAL POP. GROWTH

REVENUEMajor Revenue Source Projections

*Water, Sewer, Storm, Refuse

0102030405060708090

100

2017 2018 2019 2020 2021 2022 2023

Millio

ns ($

)

MINOT

0102030405060708090

100

2017 2018 2019 2020 2021 2022 2023

Millio

ns ($

)

WILLISTON

0102030405060708090

100

2017 2018 2019 2020 2021 2022 2023

Millio

ns ($

)

DICKINSON

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 pressureon cities to maintain affordable tax/fee levels

• GPT/Hub City funding is a critical tool

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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

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Oil Production - Big Four Counties

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2% 4%

9%

11% 13

% 15%

15%

16%

16%

17%

17%

19%

14%

14%

12%

13% 14

% 20% 23

% 28% 33

% 35% 37

% 40%

1%

5%

26%

37% 41

%

33%

28%

25%

24%

21%

20%

19%

9% 10%

8% 7% 9%

14% 17

%

16%

14% 16

%

16%

15%

73%

66%

45%

32%

23%

19%

16%

15%

12%

10%

9% 8%

0%

10%

20%

30%

40%

50%

60%

70%

2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7

PERCENT OF OIL PRODUCTION

Dunn McKenzie Mountrial Williams Remaining State

70 73 73

87 8693

88 92

72

94

113

140

167

204211

234

56 5867

7583

93 97108 111

120129

148

163

184

207

238

261 259

273

50

100

150

200

250

300

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Historical Staffing Growth

Dunn McKenzie Mountrail Williams

County Personnel Needs Exploded

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Growth Since 2010

Dunn: 31%

McKenzie: 225%

Mountrail: 72%

Williams: 84%

Truck Traffic Drives County Costs

2017 Budget Expenditures

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UGPTI Road Needs 2017-2036

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Counties Build Industrial Roads

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Capital Improvement Plan – McKenzie County

Population will continue to grow

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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

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Senator Wardner’s GPT rewrite

As Price Climbs, Impacts Will Grow

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• 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

Contact Information

• Geoff Simongeoff@ndenergy.org701-527-1832 (mobile)

Additional study details athttps://ndenergy.org/News/GPT-Study

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