Big investment cutbacks are in store for North Dakota’s oil industry, and with them will come job cuts and an industry downturn that could last quite awhile.

“We are in this for a protracted period of time,” Lynn Helms, head of North Dakota’s Department of Mineral Resources, said Tuesday. “We are looking at a situation very much like we saw in early 2015.”

In 2015, oil prices plunged partly because Saudi Arabia opened its production floodgates, turning the shale boom in North Dakota and the rest of the United States into a bust. The current oil crisis has somewhat similar origins, but with an even more destructive and unprecedented twist.

Global oil demand has been socked by economic disruptions because of the coronavirus pandemic, while prospects of a huge crude glut have materialized after major producers Russia and Saudi Arabia failed to solve a production target dispute this month. Their taps are essentially wide open now.

Oil prices this week have hit lows not seen in four years, with West Texas Intermediate (WTI) — the benchmark U.S. crude price — trading around $27 a barrel Tuesday, down from about $60 in January. The current price is simply not profitable for most U.S. shale-oil producers.

North Dakota is the nation’s second-largest oil-producing state after Texas. The state saw its oil output decline from December to January by 3% to 1.43 million barrels per day — still historically strong, according to data released Tuesday. And the state’s drilling-rig count stood at 55, roughly where it has been since December.

But “in today’s climate, that seems like ancient history,” Helms told reporters Tuesday during a monthly conference call.

Depending on the length of the oil rout, the state’s rig count could drop into the mid-20s, near the record low set in early 2016, he said. The free cash flow of North Dakota’s oil producers is expected to be cut by 50% to 60%.

“On the positive side, there are a lot of hedges in place,” Helms said, noting that producers are hedged at oil prices in the $50 to $55 per-barrel range. “That will cushion us through this year.”

Oil-crisis fallout has already started. Hess Corp., one of North Dakota’s largest players, said Tuesday it’s reducing its capital budget by $800 million or 27%, primarily by cutting its drill rigs in North Dakota from six to one.

Whiting Petroleum, whose largest projects are in North Dakota and Colorado, said Monday it would cut its 2020 capital budget by $185 million, or 30%. And Oneok, a major natural gas processor in North Dakota, last week said it would reduce its capital budget by $500 million, a 20% reduction on average.

“We think activity is going to start falling rather quickly,” said Ryan Carbrey, senior vice president of shale intel at Rystad Energy, a research firm.

Last year, close to 1,300 new horizontal fracked wells were completed in the Bakken. But at $30 per barrel oil, Rystad expects that number to sink to just under 800 this year and only 225 in 2021. At $40 per barrel, “it’s a little better, but still a lot of pain,” with new Bakken wells falling to 1,110 this year and 630 in 2021, Carbrey said.

Rystad expects the oil industry to get hit harder in North Dakota than most other U.S. shale oil plays, notably the nation’s largest: the Permian Basin in Texas and New Mexico.

“It’s just the economics of the plays,” Carbrey said. “Break evens are higher in North Dakota, and the scale of the Permian allows companies to reduce costs further [than in North Dakota’s Bakken oil fields].”

After the oil-price crash from late 2014 through early 2016, shale producers across the country cut costs and greatly improved efficiency. North Dakota’s oil production, after swooning in 2016 and 2017, began climbing steadily and hit records last year. In October and November, the state’s output peaked at 1.5 million barrels per day.

But cost-cutting this time around could be tougher with oil operations running leaner than five years ago. “Already, so much has been done,” Carbrey said.

Plus, credit availability is tight in the shale-oil industry, as production gains haven’t translated into profits for many companies. Indeed, even before oil’s recent collapse, some shale oil firms had seen their stocks hammered.

Whiting closed at $1.12 Tuesday, down from around $8 in early January and its year-high peak of $26 last March. Even Continental Resources, a big and steadily profitable player in North Dakota and Oklahoma, has seen its stock fall from a March 2019 high of nearly $50 to $35 in early January to its Tuesday close of $8.29.