The Bakken oil boom in Montana has already busted. That’s according to Terry Johnson, director of energy research at the University of Montana’s Bureau of Business and Economic research.
"I would argue that the Bakken boom in Montana actually occurred back in 2005 and 2006. That the boom is really no longer that present in Montana at this point in time."
Speaking in Missoula Friday, Johnson said it looks like Montana’s oil wells in the Bakken region have already matured, and are now yielding less oil every year. And, with the price of oil now less than half what it was a year ago, there’s little economic incentive for oil companies to drill new ones.
"Continental Resources, the largest oil producer in Montana is projected to cut their spending by 40 percent, and they also are projecting that they will reduce the number of drilling rigs by about a third, or 33 percent."
Johnson said oil production in Montana is already down more than one percent compared to last year. And that means the dollar value of oil being pulled out of the state will drop significantly from what it was in 2014."
"Oil being about $2.5 billion in terms of value, that number will probably be cut in half, to about a 50 percent reduction in 2015"
As for natural gas production in Montana?
"I’m not seeing any positive signs there because of our maturing wells, reduced investments, so I’m seeing probably about a 10 percent decline in natural gas," Johnson said.
Montana coal production should, at best, hold steady in 2015, Johnson said. That’s as long as export demand remains strong. Domestic coal markets, he says, are shrinking as more utilities retire old, coal-fired power plants.
The drop in production of fossil fuels in the state will, of course mean significantly less tax revenue, but not necessarily where many people expect is, Johnson said.
"When you talk about the state general fund budget, which is the budget that primarily funds the general operations of government, oil, natural gas, etc are not a real large component. But yet, when you go beyond that border, it becomes rather significant, has dramatic impacts on local governments. Because local governments get about 50 percent of the oil and gas revenues. And when I say local governments, I’m talking about county government and school districts. Substantial impact."
But even as Johnson predicts fossil fuel production to mostly decline in Montana next year, he says production of renewable energy is poised to continue growing.
"I would argue the only real bright spot is wind. We’ve seen incredible growth, somewhere in the range of about 20 percent per year since about 2006 through 2007. From 2013 to 2014 it was almost 29 percent."
Johnson says re-authorization of the federal wind energy production tax credit has been and will remain crucial to continued growth in the wind industry here. He says that wind currently makes up about 6 percent of all electricity generated in Montana.
