Montana's oil and gas industry.

• Author: Seninger, Steve
• Position: Industry Overview

The oil and gas industry includes jobs and businesses in oil and gas exploration and extraction, oil refineries, and oil pipeline operations. Most of the jobs are in exploration and extraction activities.

Employment has remained stable at about 3,800 jobs since 1990. Oil and gas jobs continue to be some of the highest paying jobs in Montana's economy, with average annual earnings at $32,380 - considerably above the statewide average of $20,500 for all industries and $25,679 for the manufacturing sector.

Oil and gas is a major source of income throughout Montana, especially in Fallon and Musselshell counties where it accounts for more than 10 percent of household income. In Toole, Petroleum, and Richland counties this industry accounts for more than 5 percent of income.

Trends in Production

Crude oil production stabilized at a level of 16.2 million barrels in 1995; much of this crude oil extraction occurred in northeastern Montana's portion of the Williston Basin. Natural gas maintained a decade-long production level of around 50 billion cubic feet.

Overall, Montana has more than 6,000 producing wells. In recent years, gas wells have increased as a portion of total Montana wells.

Prices and Value of Production

The oil wellhead price trended down to about $15 per barrel by 1995, although current market conditions are pushing prices toward $25 per barrel. Gas prices in dollars per thousand cubic feet reached a low of $1.23 by mid-decade although current market forces are nudging prices upward.

The overall declining price trends for oil and gas, combined with either declining (oil) or stable (gas) production levels, account for the low wellhead value of Montana oil and gas production. The current value of $298 million may be moving up in the second half of the decade due to upward pressure on oil and gas prices and favorable effects from the Red River "B" horizontal play in northeastern Montana.

Oil and Gas Tax Payments to State and Local Government

Oil and gas producers pay several kinds of taxes to the state based on the value of oil and gas production. These include resource indemnity taxes, licensing taxes, and state severance taxes. Lease rents and bonuses and production royalties also flow from the oil and gas industry to the state treasury. In 1994, these industry payments to state government totaled about $18 million.

Industry revenue payments to local governments throughout Montana consist of property taxes levied on net proceeds from...