In downturn, North Dakota's oilfield firms jostle for tiniest of jobs

By Ernest Scheyder
WILLISTON, N.D., Aug 19 (Reuters) - Oilfield service
companies eager for work amid plunging crude oil prices CLc1
have until the end of Wednesday to bid for a guaranteed job:
plugging a North Dakota well abandoned by a producer closing up
shop in the No. 2 U.S. oil patch.
Whichever oilfield service company does the plugging, be it
Halliburton (NYSE:HAL) Co HAL.N , Schlumberger NV (NYSE:SLB) SLB.N or another firm,
the job could bring in more than $20,000.
While that's far less than the millions they have received
to drill and fracture wells in years past, the more-than 70
percent drop in oil prices CLc1 since last summer means no job
is too small.
Oil producers are delaying fracking jobs at roughly 850
wells throughout the state, according to data from regulators,
harming profitability throughout the oilfield service industry
and fueling layoffs. ID:nL3N1045EQ
Amid that slump, North Dakota officials last year
confiscated Rio Petro Ltd's Sundhagen #1 well in Williams
County, near the state oil capital of Williston.
The reason: Rio Petro did not notify regulators about work
done on the well, a violation of state law. Nor did it increase
the required bonding on the well, aimed at covering the cost of
its reclamation, to $50,000 from the previously required
$20,000. The privately held company also did not respond to the
state's inquiries.
"Since they did not respond, we are basically confiscating
the well," said Alison Ritter, spokeswoman for the state's
Department of Mineral Resources.
The well has never been prolific, producing only 55,569
barrels since it first came online in 1980, according to state
data.
That may explain why Rio Petro gave the well - its only one
in the state - sparse attention. A secretary who answered the
phone at the Airdrie, Alberta-based company declined to be
identified said Rio Petro was preparing to shutter.
The state runs an Abandoned Well Site and Restoration Fund
for older wells that is partially replenished by oil taxes. The
fund has roughly $11 million. Up to $7.5 million may be spent
each year on reclamation, the DMR's Ritter said.
From the state's perspective, plugging the Rio Petro well -
rather than keeping it online - makes logical sense.
"We're not in the production business," said Ritter. "If
another producer wants to come in and acquire this asset, that's
up to them."