For first time in 28 months, ND oil production drops below 1M barrels
WILLISTON, N.D. - North Dakota oil production has dropped below 1 million barrels per day for the first time since hitting that milestone in April 2014.
WILLISTON, N.D. – North Dakota oil production has dropped below 1 million barrels per day for the first time since hitting that milestone in April 2014.
The state’s oil production fell 4.7 percent in August to an average of 981,039 barrels per day, the Department of Mineral Resources said Thursday, Oct. 13.
“This is a day we had been anticipating but not looking forward to,” said Director Lynn Helms.
North Dakota oil production peaked in December 2014 at nearly 1.23 million barrels per day.
Helms said he expects the state’s oil production will continue decreasing over the next nine to 10 months and level off at about 900,000 barrels per day.
The significance of producing 1 million barrels per day -- which was celebrated by state officials and the oil industry in 2014 -- is mostly psychological, Helms said. North Dakota continues to be the second-highest oil producing state, and oil production is still slightly ahead of figures used to develop the state’s budget.
“We’re tracking very well with the revenue forecast,” Helms said.
The production drop of about 48,000 barrels per day in August was higher than recent monthly declines and in part due to some operators who restricted production because of low prices, Helms said.
“It wasn’t just a natural decline of wells or a reduction in well completions, but actual intentional reduction of production in order to maintain their assets and not liquidate at low prices,” he said.
Helms expects the industry slowdown will likely continue through mid-2017 and said it will take a long time to get back to 1 million barrels per day.
If the Dakota Access Pipeline is delayed, Helms said that likely won’t affect Bakken production in the short-term, but “it does have potential to hold us at those low levels longer.”
The four-state pipeline, which connects with another pipeline at Patoka, Ill., to carry crude oil to Gulf Coast refineries, is expected to reduce transportation costs for Bakken producers.
Natural gas production fell 3.5 percent in August to 1.6 billion cubic feet per day, according to the preliminary figures.
The percent of natural gas flared increased in August from 10.5 percent to 11.4 percent.
The industry will be required to capture 88 percent of natural gas by Nov. 1 under targets set by the North Dakota Industrial Commission. Helms said the Oneok Bear Creek gas processing plant now operating in Dunn County will help the industry meet that goal.
Thirty-three drilling rigs were operating in North Dakota on Thursday, compared with 67 a year ago and 191 two years ago.
Dunn County now has the most drilling activity with 12 rigs. McKenzie County, traditionally the busiest oil county, had nine rigs on Thursday.
As operators focus on the core of the Bakken where wells are most productive, they’re finding the best results in northwest Dunn County, Helms said. That area is expected to have the most oil activity for the next three to five months.
“They expect to hit that area very hard,” Helms said.
The number of wells that were drilled but waiting on fracking crews fell to 888 at the end of August, down 24 from the month earlier.
Sixty percent of North Dakota oil was transported by pipeline in August and 29 percent was transported by rail, said Justin Kringstad, director of the North Dakota Pipeline Authority.
About 300,000 barrels per day traveled by rail in August, with the East Coast receiving 58 percent of the shipments.