Oil tax study

A pump jack at a well site outside of Williston.

North Dakota’s oil and gas industry self-restricted nearly 100,000 barrels of oil production in the month of November, and low oil prices and colder temperatures also pushed oil production down 17,000 barrels per day to 1.375 million barrels per day.

Similarly, gas production also dropped from 2.562 MCF per day to 2.523 MCF per day.

Despite the drops in production, however, and the self restrictions, industry as a whole still missed flaring targets, capturing 79 percent or 1.996 MCF per day. The total volume flared was 527 million cubic feet per day.

Director of Mineral Resources Lynn Helms said the production drop wasn’t unexpected with winter weather and the drop in oil prices that month.

Fourteen days in November were 15 degrees below normal, Helms said, and there was precipitation on most of those below normal days.

Permitting experienced the usual seasonal drop, Helms added, with most companies seeking to have all the permits they need in hand before Thanksgiving, so that construction can be completed prior to freeze-up.

An unfavorable differential between WTI and Bakken crude during the fall has been slowly but surely correcting itself. It was caused in parlty by routine maintenance at Great Lakes refineries, which took some processing plants offline, causing a supply glut at Clearbrook, Minnesota.

Clearbrook is the first major interface for North Dakota crude as it moves into the Great Lakes refining area. Cushing, another PADD 2 hub for crude oil, is much further away, to the south, and is generally the gateway for Gulf Coast refineries, which are in PADD 3.

Rig counts have also remained solid, Helms said, and are running at 68 today.

“Industry remains cautiously optimistic,” he said. “They haven’t backed down, but with cold weather, (hydraulic fracturing) crews are restricted. We will probably see non-completed wells increase.”

Fort Berthold, meanwhile, went the opposite direction in most every category. It had more rigs and more production, and set a new record for producing wells. Its uncompleted well counts also dropped, its drilling permits went up and gas capture dropped 2 percent, from 70 to 68 percent.

Helms suggested that reflected uncertainty over changing regulations that may govern reservations and trust lands, once negotiations between the tribes, state and federal government are complete. Those have been on hold, due to the shutdown, and Helms said they will likely not be able to have them in place by the deadline in February.

There could also be changes to tax agreements with the state, now that the legislature is in session, Helms added.

“Operators want to get their wells in the ground and producing before any changes might take place in terms of changing regulations or tax agreements with the state,” he said.

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