map of crude oil prices

Last month, North Dakota Director of Mineral Resources Director Lynn Helms predicted oil production would drop in October, largely due to maintenance operations on Northern Border that took away a significant amount of takeaway capacity for the gas that comes with Bakken crude oil production.

Production did indeed drop, but not by a lot. There was a .3 percent reduction of 3,700 barrels, taking the state from 1.114 million barrels per day to 1.110 million barrels per day for October. A majority of that lost production was on Fort Berthold, where there has been less natural gas takeaway and thus less resiliency when there are natural gas impacts in the state.

“We’re really anxious to get in and work with some companies on flare mitigation technologies to see if we can’t incentivize getting those (production) numbers up,” Helms said.

Flaring, however, did not tick up as a result of the situation with Northern Border. It was at 94 percent statewide, Helms said.

The production in October was still 1 percent above revenue forecast. Prices, meanwhile, were 50 percent above revenue forecast, which means the state’s budget is not just on track, but did a bit better than expected.

North Dakota continues to lag New Mexico prod action by about 100,000 barrels per day, keeping it in the No. 3 spot for top shale producers in the nation.

Rig counts are now in the 30s for the state, which trails New Mexico’s 88 by a fair amount.

Helms referred to a recent report out from Rystad that showed the Bakken’s capital investment was down 14 percent for the year, whereas it was up 15 percent for the Permian. That same report shows companies plan to boost capex in the Bakken to 19 percent next year.

“So we in fact are on track to start seeing that rig count march up and completions march up and we should get back into a slow growth mode on production,” Helms said.

Helms has also been talking about what’s ahead with Bakken operators and said that one of the state’s larger companies has contracted four more rigs starting in February, which will boost the state’s rig count to the high 30s.

“They are struggling to get trained personnel to make that happen,” Helms said. “But they’ve got a couple of months to get that done.”

Completions also towed the revenue forecast line in October, coming at at just one above forecast. And November was also a very strong month with 60.

“So with fewer rigs and 10 frack crews operating, what that did was see saw our DUC well count drop by about 50 wells,” Helms said. “It went from over 500 down into the four hundreds. So again as we have been projecting, they’re using a lot of frack crews to complete those DUC wells and reduce that inventory.”

Inactive well counts went down a little, but were in keeping with seasonal trends. Active producing wells have hit a new all-time high, at 17,163. Of those, 2,278 are from legacy conventional pools.

Looking ahead at the global forces that affect Bakken production, Helms said the forecast estimates a shortfall of a million and one-half barrels production versus demand. This is likely to drive prices up, and that means that $100 oil that a few analysts have been predicting is not necessarily out of the question.

II guess I would say, really enjoy the relief that you have seen right now in gasoline prices,” Helms said. “Because it can’t possibly last in that situation.”

Load comments