North Dakota State University president Dean Bresciani is very familiar with energy plays and boom bust cycles. His previous experiences in Texas allowed him to consume oil and gas on a day-to-day basis. Only his consumption was more intense than the average industry professional. It involved research and finance along with energy development.
“It really is in some ways advantageously geologically and the location of the reserves. It has been interesting to me, my doctoral training is in finance and economics,” Bresciani said. “So when I hear the understandable and a North Dakotan says this is just another boom and bust cycle like the old boom and bust cycles. Which is a learned behavior and reaction, it’s just not founded in science.”
The location of the Bakken oil reserves have been known for decades. Horizontal drilling and hydraulic fracturing unlocked those reserves and showed how extensive and expensive those wells are.
“They are not going anywhere obviously,” Bresciani said. “So really the limitation and capacities are economically based and price based and technology based.”
Previous oil cycles resulted in traditional boom bust cycles in the Bakken. The last bust in the early 1980s, left western North Dakota with stereotypical oil bust towns. This go around, however, has a different look at feel to it than those previous years.
“So the notion that this is a bust cycle and everything is going bad is really a misnomer and the Saudis have already demonstrated that they understand they can not continue the behaviors they are using because they are losing money,” Bresciani said. “That’s a long winded way of saying prices are going to play back up. Consumer won’t like that but the reality is on the worldwide market we are going to see it, it is inevitable it is only a when not an if the prices with go back up. Again those assets are still in the ground so even if the prices didn’t go back up for 100 years, the asset is still in the ground and is extractable.”
He also pointed out this time in the Bakken’s history is critical for some companies who may not have adequate resources or long-term strategies.
“This is an interesting commodity price fluctuation, but it is also for the smarter players the opportunity to consume more of the market share so when prices go back up you’ve advantageously positioned yourself to be more successful,” Brescini said. “Again the asset is just sitting there waiting to be extracted, it is not going anywhere and it not like a crop where if it goes bad you have to start over. The asset is sitting there totally extractable.”
Big picture, Bresciani sees the Bakken and the energy play in North Dakota as an incredible opportunity to solidify the energy industry and the University’s research role.
“The entire state has a window of opportunity that is open now like the state has never seen before,” Bresciani said. “There is really no place in the nation that has similar opportunity, but I also think that motivation and capacity, which the possible exception of Texas, where there is some similar dynamics there with the two major research universities and energy extensive economic development sector, but North Dakota has a differentiating factor which is the chance to strengthen and diversify our economy that has never existed for this state, whereas Texas comes and goes with that opportunity and a plethora of other opportunities.”