For the past six months, Americans flinched every time they put the gasoline nozzle into their automobile’s gas tank. Spending $300 a month on gas was the norm. Now, people can drive again. The dropping prices at the gas pump come with a five-year oil low, which is wavering at the $40 a barrel mark. This oil price, for towns such as Sidney and others through unconventional shale plays in North America, is a double-sided coin. Businesses, farmers, motorists are glad for the price of gas to be down, making driving the long distances of the rural countryside economical once again. However, with the price lower than $60 a barrel, drilling and exploration around these recent boom towns are slowing down.

For those in Richland County, the story has the familiar taste of the boom and bust of the early 1980s. The oil price has dropped 68 percent from its high only months ago in July, a drop of $100 in only five months. No one thought the price of oil would fall out. No one thought an economic crisis would hit so hard, either. However, a complete dry-up in activity is not likely.

The Bakken is still the largest on-shore oil reserve discovered in America in the last 40 years. That’s something energy companies will not pass over. A well in the Bakken Formation costs around $6 million or more to drill. With high oil prices and good producing wells, production was extremely profitable. While the wells in the Bakken are very expensive, the technology and expertise on drilling and completing wells has advanced immensely since drilling in the Richland County Bakken began in 2000. Horizontal and directional drilling started with one lateral and one frac. Now, the lateral may be long or short, sometimes more than one, and depending on length, might have 20 fracs. These advancements, while not decreasing the price of drilling, do increase the chance of wells producing at higher rates. In a recent Webcast, Ben Brigham, CEO of Brigham Exploration, said the Bakken should provide attractive economics even at lower commodity prices. Meaning companies will still remain active though not at the same rate. According to Baker Hughes, in 2005 Montana had an average of 25 active oil and gas drilling rigs. Last week’s count was 10 drilling rigs. Though the drilling activity is significantly higher than it was at the same time last year, the drop in oil price has curbed the activity. Instead of growth, exploration and drilling has reached its first decline in North Dakota’s Williston Basin in three years. North Dakota last week had 81 drilling rigs, a decrease of five drilling rigs from the first of the month. Of course, the drop in rigs is nationwide with 45 fewer rigs operating than at the same time last year.’

“Drilling in Montana is not likely to increase over the next year, North Dakota is drilling along but we are all at a slowed-down pace,” Montana Petroleum Association executive director Dave Galt said. “Much of the issue is that North Dakota has a field that is not as developed as the Elm Coulee is in Montana,” Galt explained.

Locally, oil businesses like Mitchell’s Oil Field Service Inc. are feeling the pinch. Manager Duane Mitchell says that although the company is “staying busy,” the trucks that haul the oil are slowing down. He predicts a significant slow down next quarter, however, there hasn’t been any cuts as of yet. “No lay offs,” he said. “We just haven’t done any hiring.” While industry professionals try to reformulate their company’s financial plans for the next year to still remain profitable, rigs going down mean jobs being cut. With each rig down, 20 direct jobs are lost and 50 or more indirect jobs lost. Recently, booming oil field service businesses will adjust accordingly, changing prices, budgets and cutting employees. For Sidney and towns throughout western North Dakota, the effect will be intimately felt. A drop in active rigs is a drop in jobs, from roustabouts to drivers to construction workers.

Analysts and economists generally concur that the price of oil will not likely rise much in 2009, but don’t think it will stay down throughout 2010.

The increase in oil price is caused by a surplus of oil supply while demand is decreasing during the economic crisis. The Organization of Petroleum Exporting Countries [OPEC] met in mid-December to discuss the plan and cutbacks it should implement. OPEC agreed to cut production by 2.2 million barrels in 2009, but many analysts and industry professionals are skeptical if they will remain true to their word. Other countries, such as Russia, have not implemented cutbacks, but have natural cutbacks in productions caused by a falling oil price.

Even so, many believe the cut in production is not enough to stabilize the price anytime soon. Until the surplus decreases and demand once again increases, the price of oil will remain in a low limbo.