By: Jacob Orledge
BISMARCK, N.D. (North Dakota Monitor) – North Dakota’s oil and gas industry is not expected to significantly increase drilling activity in response to the price surge, a stark departure from the familiar boom-and-bust cycle in the Bakken.
Domestic crude oil pricing benchmarks have been hovering just shy of $100 per barrel. A decade ago that would have prompted a scramble to drill new wells. Instead, activity levels in North Dakota are virtually unchanged as about 25 drilling rigs and eight frack crews remain active in the state.
The flat activity levels are partly due to changes in the state’s oil industry in recent years, regulators said this week. A series of consolidations in the industry have left North Dakota’s oil and gas industry dominated by some of the largest energy companies in the country. Their 2026 budgets have already been set and are unlikely to change.
“I don’t foresee them making rapid changes until there’s a price stabilization,” said David Tabor, senior field operations manager for the North Dakota Department of Mineral Resources. “Then they’ll most likely adjust accordingly.”
Nathan Anderson, director of the Department of Mineral Resources, told lawmakers last week that oil price projections are heavily contingent on the duration of the war with Iran in the Middle East and the length of time the Strait of Hormuz remains closed to shipping.
North Dakota lawmakers are closely tracking the price of oil and the impact on production due to the importance of oil revenue to the state budget.
Anderson and Tabor expect the oil industry to look for ways to optimize existing production before considering any investments in new drilling operations, such as bringing some of the state’s 2,835 inactive wells back online. A well is considered inactive if it has reported zero production for three months or more and can take less than a week to restart.
“That’s something I predict that you’ll see more of,” Tabor said.
Even if major oil companies decide to invest in new drilling, there would likely be a delay of six months or more before those decisions lead to any surge in oil production, said Justin Kringstad, executive director of the North Dakota Pipeline Authority.
The U.S. Energy Information Administration’s March 10 report predicts the elevated oil prices are temporary and global supplies will recover in the second half of 2026. That projection hinges on whether the Strait of Hormuz is reopened to commercial shipping within the next couple months.
The Strait of Hormuz is a maritime bottleneck between the Persian Gulf and the Indian Ocean that a fifth of the world’s oil production, exported from countries like Iraq, Saudi Arabia, United Arab Emirates and Iran, has to pass through.
Iran has effectively closed the strait to commercial shipping after the United States and Israel began launching air strikes against the country on Feb. 28. This has cut off between 10 million and 20 million barrels of daily oil production being cut off from the global market, Anderson said.
A glut of supply was one reason oil prices were so low prior to the conflict. Anderson said oil tankers on oceans around the world are estimated to be carrying between 200 million and 300 million barrels of oil that exceeded pre-conflict global demand.
“You guys can do the math and the oversupply that we had just 20 days ago certainly gets taken up pretty quick,” Anderson said to lawmakers Wednesday.
It would take approximately a month for that supply of oil to be consumed by the production deficit created by the closure of the Strait of Hormuz.
“The longer this goes on, the more the supply that’s on the water gets taken up to supply the countries around the globe, and you’ll have a shortage,” Anderson said. “That’ll keep prices high until operators adjust their activity levels.”
The loss of those exports will affect oil refineries in the United States and potentially benefit North Dakota. EIA data shows West Coast refineries import between 200,000 and 250,000 barrels of oil per day from the Persian Gulf, primarily from Iraq, while East Coast refineries import between 110,000 and 140,000 barrels of oil per day from the region, mostly from Saudi Arabia, Kringstad said.
He’s watching to see if North Dakota operators will begin moving more oil production to the coasts by rail, rather than by pipeline to the Gulf Coast, to take advantage of potentially higher prices offered by those refineries.
“That will be an interesting dynamic that we’ll keep a very close eye on,” Kringstad said.
A coalition of 32 countries announced last week it would release 400 million barrels of oil onto the market from strategic reserves, including 172 million barrels from the United States’ Strategic Petroleum Reserve, in an attempt to lower oil prices. The United States last tapped into the strategic reserve in 2022 when the Biden administration released 180 million barrels of oil to combat rising gasoline prices in the wake of Russia’s invasion of Ukraine.
The release will take place over the next four months and will leave the strategic reserve at its lowest levels since 1982.
“I’m in full expectation that those reserves will be drawn upon, and they’re going to be needed,” Kringstad said. “But even with those announcements and those actions, we’re still seeing a marketplace that believes there’s going to be under supply concerns, and prices are reflecting that.”
Any meaningful ramp-up in North Dakota production will be a slower process for companies. Regulators don’t expect to see significant changes from operators until 2027, at the earliest, if prices are elevated for a long duration.
“I don’t anticipate that occurring real soon,” Anderson said. “Those larger companies tend to have a longer term view and plan farther out than next month.”
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