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ND oil production has largest drop ever in April

WILLISTON - North Dakota oil production had its largest drop ever in April, falling more than 6 percent to 1.04 million barrels per day, the Department of Mineral Resources said Wednesday.

Pumping units are pictured near Williston, N.D., on Tuesday, June 14, 2016. North Dakota oil production dropped 6 percent in April, but the state continues to produce more than 1 million barrels per day. Amy Dalrymple/Forum News Service
Pumping units are pictured near Williston, on June 14. North Dakota oil production dropped 6 percent in April, but the state continues to produce more than 1 million barrels per day. (Amy Dalrymple/Forum News Service)

WILLISTON – North Dakota oil production had its largest drop ever in April, falling more than 6 percent to 1.04 million barrels per day, the Department of Mineral Resources said Wednesday.

Director Lynn Helms attributed the 70,400-barrel-per-day drop to the ongoing oil industry slowdown, but said weather and other factors made the decline “abnormally high.”

“I don’t anticipate that this is the beginning of a trend or we’re going to see additional months with this kind of drop,” Helms said.

In addition to low oil prices, which have prompted a sharp decline in drilling and fracking, the month of April also had 15 days that were too windy for crews to complete wells, Helms said. Spring road restrictions also were in effect in April, which severely limited the travel of heavy trucks and equipment needed for fracking and other well operations.

The previous record for an oil production drop was set in December 2013 when production fell more than 50,000 barrels per day because of extreme winter weather.

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Helms said he expects North Dakota oil production will have either small decreases or small increases in the coming months but fall below 1 million barrels per day before the end of the year.

Williams County, which includes the oil hub of Williston, dropped to zero drilling rigs this week for the first time since October 2008. The county saw a peak rig count of 48 in September 2011.

Helms called it “very significant” to have the county’s rig count drop by 100 percent. Statewide, the rig count is down 88 percent since the peak.

Twenty-seven drilling rigs were operating in North Dakota on Wednesday, an increase of one since May, which Helms said he sees as good news.

“That’s a positive. Not a huge positive, mind you, but at least it indicates that we’re at the bottom,” Helms said.

Drilling is concentrated in the core of the Bakken where wells have the greatest economic returns, with most rigs in McKenzie and Dunn counties.

Another positive sign is the price of West Texas Intermediate oil has been above $45 since April 11. If it stays above that target for 90 days, Helms expects companies will begin putting inactive wells back on production.

The number of inactive wells was up to 1,590 in April, an increase of 67 from March.

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But the WTI price will need to stay above $50 for 90 days before crews will begin working on a backlog of wells that have been drilled but are still waiting on fracking crews, Helms said.

Crews completed 41 wells in April, down from 66 wells that were completed in March. The number of wells that were drilled but waiting on fracking crews was 892 in April, a decrease of 28 from the end of March.

Natural gas production fell 5.5 percent in April to 1.6 billion cubic feet per day, according to the preliminary figures.

Natural gas flaring was 9.2 percent in April, down from 9.7 percent in March. Operators flared nearly 123 million cubic feet per day of natural gas in April, down from nearly 148 million cubic feet per day in March, according to the state’s figures.

The U.S. Energy Information Administration highlighted this week that both the volume and the percentage of natural gas flared in North Dakota has declined sharply since 2014.

“We’re really making progress on capturing and marketing natural gas in North Dakota, even in the face of some pretty low natural gas prices,” Helms said.

Rail transportation of Bakken crude continues to fall, dropping below 400,000 barrels per day for the first time since August 2012, according to the North Dakota Pipeline Authority.

The volume of crude transported by rail exceeded 800,000 barrels per day in late 2014, but Director Justin Kringstad said he doesn’t anticipate North Dakota will see the those high rail volumes again unless there’s a major market shift or a disruption on a pipeline system.

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The East Coast continues to receive the bulk of crude by rail shipments from the Bakken, but the percentage declined in March to 55 percent while the West Coast made up a larger share than previous months with 35 percent, according to the EIA.

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