By Lance Medlin, EVP and chief operating officer at Meridian Energy Group, Inc.
When I was a child growing up in Washington state, my brother and I would spend each summer with our father hiking through the base of Mt. Baker through the North Cascades National Park, just east of our home in Burlington. Amongst many of the survival skills I learned on those trips, which included how to start a fire, how to forage for food, and how to construct a shelter, the survival skill that comes to mind now is one called orienteering: “if you become lost, follow the river downstream.” Those words have a way of finding their way back into my mind as we traverse what is once again a difficult energy landscape. The all-out crash of the domestic crude market will inevitably impact jobs throughout the entire exploration and production market – perhaps none as immediately and directly as those in North Dakota, given the near shut-in of Bakken production.
Keys to survival when you’re feeling lost
Assess the situation. In our case, the ‘crude situation.’ There’s no illusion as to what led us down the path of a <$30/bbl oil. OPEC+’s decision to crash the global crude market with an all-out price war is directly to blame. Getting off this path is where the next decisions have to be made, and with great care.
Stay or try to hike out? Staying means hunkering down and riding it out. Cut back or completely delay all new exploration. Reduce current production volumes. Postpone or cancel any new Capex work, such as new pipeline projects or new production facilities. The impact is immediate, and it comes at the cost of exploration, production, and construction jobs in North Dakota and the greater Bakken region. Sadly though, even if you choose to hike out, you have to bring all the baggage of ‘staying’ with you. The current price of crude just doesn’t support the aggressive exploration and production profile we have enjoyed for so many years. We’ll see it again in the future, but not next week and not next month. It is not likely that 2020 will be the year of exploration. So collectively, we need to decide to hike out.