MHA Nation Chairman Mark N. Fox shared the pandemic’s impact on oil and gas during the Native Business Virtual Summit live broadcast.
The Mandan, Hidatsa, and Arikara (MHA) Nation’s Fort Berthold Indian Reservation in western North Dakota sits on the oil-rich Bakken shale formation, with the Three Forks beneath it. More than 2,000 wells dot the reservation. But COVID-19 has crippled the Tribe’s primary economic driver, oil and gas, and thus the Tribal economy.
“We’re an energy based Tribe. We’re a Tribe that relies greatly on the development of its trust asset, oil and gas. As you know, as the nation and the world knows, when the pandemic came upon all of us, it caused a great reduction in the price and value of a barrel of oil, which went down to minus 37 in one day, which basically means a negative value. We’ve been struggling with that ever since,” Mandan, Hidatsa, and Arikara (MHA) Nation Chairman Mark N. Fox shared during the Native Business Virtual Summit live broadcast.
“As a Tribal Nation that heavily relies on and heavily invests in energy, we have suffered greatly, because we’re looking at, in comparison to 2019, at the same time between May and where we stand today, and where we’ll be at by December, we’re losing hundreds of millions of dollars, literally, and so we’ve suffered greatly,” he continued.
When companies that lease MHA land abandon or shut-in wells to stave off bankruptcy, it has dire consequences, due to the decline curve in the value of a well.
As Chairman Fox previously explained to Native Business: “With oil and gas, you can’t just drill in one given year, and then kick back and wait for three years and start doing it again. Seventy percent of a well’s value comes out within the first three years. The lifetime of a Bakken well is about 30 years. So the first 1-3 years makes up just 10% of the lifetime of that well, but 70% of the revenue flows out of a well within those first three years. That creates a decline curve in every well that’s drilled.”
To maintain production, matching new wells must be drilled. Essentially, when you hit a decline curve on an older well, you need to drill a new well. But if you’re capping the old wells, and you’re not drilling any new wells, you’re “shutting in” oil.
While the situation is dire, the MHA Nation is doing the only thing it can — push forward, while working to build Tribal self-sufficiency and resiliency. Continue checking NativeBusinessMag.com for more articles featuring insight from Chairman Fox about economic and cultural preservation, in addition to more wisdom and advice delivered by Tribal leaders and entrepreneurs at the Native Business Virtual Summit that was broadcast live from Native Business production studios in November 2020.