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Oil patch keeps pumping

Another month, another set of records in North Dakota's booming oil patch.

Lynn Helms, director of the state's Department of Mineral Resources, part of the Industrial Commission, released his monthly "Director's Cut," this week with the latest statistics.

In May, the 155 or so oil companies drilling and pumping oil in the state's Williston Basin put out 9.189 million barrels of North Dakota sweet crude, the most in one month since the first commercial well was drilled in 1951 near Tioga.

April's production was 8.53 million barrels.

Those are the latest figures compiled, but there's little doubt the production rate has increased since May in pace with the drilling activity.

On Wednesday, there were 136 drilling rigs operating in the state, according to figures provided by Helms' agency. Each drilling rig can complete a new well about every month. In April, the drilling rig count averaged 107, in May 114 and June 125.

Although the record rig count dates to 1981, when 148 were drilling, the comparison doesn't stand, because each well drilled now drains oil from 640-acre or 1,280-acre spacing units, rather than the 160-acre or smaller units in the early 1980s.

Last year, the state produced a then-record 79.7 million barrels of oil, or an average of 6.64 million barrels per month. Helms has said for months he figures this year's production will go above 100 million barrels.

The number of wells producing oil also set a record in May: 4,893; up 83 from April.

Some of the wells have been producing since 1955.

But 95 percent of the new drilling is in the Bakken and the Three Forks formations that have spurred the boom of the past four years in the state.

Based on drilling activity, the number of producing wells no doubt has grown to about 5,000 since May.

Natural gas, considered a byproduct of oil drilling in the state, also is being produced at record rates: 9.28 million cubic feet in May, based on a daily average production of 299,275 MCF, also a record, according to Helms.

"Natural gas production is setting new records," Helms reported. "Two major plant expansions plus gathering pipeline expansions were announced for 2001 in April."

The price of North Dakota sweet crude remains relatively high, at $62.46 this week, up from the average price in May of $60.10 and down from April's average of $71.26.

A rule of thumb is that any time prices get much below $50 a barrel, drilling activity in North Dakota slows.

Helms said low prices for natural gas and the furor over the massive deep-water oil spill by BP in the Gulf of Mexico make the state's oil look more attractive and "are pushing our rig count higher than it would normally be at current prices."

Several factors could reduce the number of drilling rigs in the state to between 100 and 115, Helms said:

- If natural gas prices rise, shifting more drilling to gas-producing regions of the country.

- Signs federal officials won't clamp down too hard on off-shore oil production in wake of the BP spill.

- More federal regulation of the hydraulic fracturing technology used to obtain oil in the Bakken and Three Forks and of "blow-out preventers," used on oil wells.

-- Lee is a reporter at the Grand Forks Herald, which is owned by Forum Communications Co.