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ND oil production drops 2 percent in June

WILLISTON -- North Dakota oil production fell 2 percent in June to less than 1.03 million barrels per day, the Department of Mineral Resources said Friday.

Oil production sites are pictured in McKenzie County, N.D., on Thursday, July 28, 2016. photo by Eric Hylden/Forum News Service
Oil production sites are pictured in McKenzie County, N.D., on Thursday, July 28, 2016. photo by Eric Hylden/Forum News Service

WILLISTON -– North Dakota oil production fell 2 percent in June to less than 1.03 million barrels per day, the Department of Mineral Resources said Friday.

The drop of more than 20,000 barrels per day puts the state’s oil production at its lowest point since April 2014, said Director Lynn Helms.

Low oil prices continue to be the cause for the slowdown, with prices that seem to be stuck between $40 and $48, Helms said. The price needs to hit at least $50 for increased hydraulic fracturing activity in North Dakota.

“Being stuck in that band is tough, especially during these good weather months when there could be a lot of activity,” Helms said. “That’s causing production to continue to slide.”

Helms expects oil production will drop below 1 million barrels per day by the end of the year and plateau around 900,000 barrels per day.

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Companies completed 44 new oil wells in June, bringing the number of wells that have been drilled but waiting on fracking crews to 887.

In order to maintain production, companies need to add 70 to 80 new wells each month, Helms said.

In addition, Helms said he’s hearing anecdotally that more companies are shutting in wells or restricting production due to the most recent price drop.

“Operators are pretty frustrated and not willing to liquidate their oil assets at those low prices,” Helms said.

The state had 33 active drilling rigs on Friday, which is higher than the low of 25 hit earlier this year but still at May 2009 activity levels.

While oil production dropped, natural gas production increased 1 percent in June to nearly 1.67 billion cubic feet per day. Helms attributes the increase to the focus of activity on the prolific core of the Bakken, where wells produce more natural gas.

Even though natural gas production increased, the amount of gas flared decreased, continuing a trend for the industry. The percentage of gas flared decreased from 11.5 percent to 9.8 percent in June, according to the preliminary figures.

With the oil price above $40, companies are putting workover rig crews to work and repairing wells that had been inactive, Helms said. The state’s inactive well count dropped 98 in June to 1,486.

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The amount of Bakken crude being hauled by rail continues to drop due to market conditions that are driving more barrels to be shipped by pipeline, said Justin Kringstad, director of the North Dakota Pipeline Authority.

Just over 300,000 barrels per day left Bakken rail terminals in June, with the majority headed to the East Coast, followed by the West Coast refineries, Kringstad said.

About 29 percent of Bakken crude was transported by rail in June compared to 57 percent by pipeline.

The state had an uptick of oil transported by truck north to Canadian pipelines in June, which Kringstad said is likely in part due to the Fort McMurray wildfire in Alberta.

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