North Dakota governor charts his path to Interior with a rosy state oil and gas outlook

BISMARCK, N.D. — President-elect Donald Trump has given his choice for Interior secretary a mandate to “Drill baby drill,” and on Wednesday his pick, North Dakota Gov. Doug Burgum, offered a rosy budget picture to lawmakers based largely on his state’s success in extracting near-record levels of oil and gas from the ground.

Burgum, whose term ends next week, noted North Dakota’s status as the nation’s No. 3 oil-producing state in his final proposed budget before he begins his role in Trump’s administration, pending Senate confirmation. Besides serving as Interior secretary, Trump has chosen Burgum to lead a newly created National Energy Council that intends to ensure U.S. “energy dominance.”

“We look forward to the next four years where we believe that there’s going to be a shift towards innovation over regulation and an opportunity for North Dakota and our mineral owners to be able to more quickly and easily get permitting to access those natural resources for our country,” Burgum told a packed House chamber, also lamenting dozens of energy-related federal regulations his state is fighting.

Burgum, a two-term governor and wealthy software entrepreneur, would seem a good choice to carry out Trump’s mandate for both the new council and Interior, where he would oversee public lands and natural resources. Environmentalists are worried about what Trump’s second term will mean for climate-change initiatives. Trump has said he will roll back President Joe Biden’s policies.

Oil and gas are key to the economy of North Dakota, where hydraulic fracturing and horizontal drilling began an oil boom in the late 2000s.

State officials pegged a preliminary all-time high of 19,200 producing oil and gas wells in September. Oil taxes have come in 13% over forecast in the state’s 2023-25 budget cycle, or $475 million more than projected, according to a November report. Oil production hit nearly 1.2 million barrels per day in September.

North Dakota set its record annual oil production in 2019 — under Burgum — at 524 million barrels, according to a historical report. Last year was the state’s No. 4 year for oil production.

Burgum’s $19.5 billion two-year budget recommendation projects oil production of 1.1 million barrels per day in the 2025-27 budget cycle, with oil prices of $62 and $60 per barrels in each year of the next two budget years, respectively.

Oil tax revenue is a huge driver of the state budget, which relies on oil taxes for everything from school funding to help with property tax relief, health and human services, and infrastructure projects around the state, said longtime Republican Rep. Mike Nathe, a House budget writer.

“Oil revenue touches every community in the state,” Nathe said.

Oil taxes also feed the state’s sovereign wealth fund, which has grown to over $11 billion since voters created it in 2010. Hundreds of millions of dollars in earnings come off that fund for lawmakers to put to use.

But oil’s volatility hit the state hard in 2016, resulting in a massive revenue shortfall that led to budget cuts and a drain on reserves. Oil forecasts are key to the Legislature’s budget process.

Other states revenues are in healthy shape. Total general fund revenues are 12% over forecast, or $392 million, according to a report last month. Sales taxes are 12% ahead, or $182 million.

Burgum’s budget includes a $6.5 billion general fund, the state government’s main operating account. The 2023 Legislature approved a record $19.6 billion 2023-25 budget, with a $6 billion general fund and billions in federal money. That total budget was over $1 billion more than what Burgum had recommended.

His final template for lawmakers includes increases for state employee salaries and benefits and K-12 education. He outlined focus areas of workforce, housing, infrastructure, information technology and other big items. His recommendations include millions for child care initiatives, addiction help, and housing programs and grants.

The Legislature’s budget writers will consider Burgum’s budget in their work, but they will also be getting a budget proposal in mid-January from Burgum’s successor, Republican Gov.-elect-Kelly Armstrong, who takes office Dec. 15.

The Legislature convenes in early January. Republicans hold supermajority control of the House and Senate.