North Dakota added another rig this month, along with a half percent bump in production to 1.113 million barrels per day. That wasn’t enough to bump the state out of third place in the nation’s top oil producing shale plays, but it did bring it very close to New Mexico’s 1.12 million barrels per day in the Permian.
North Dakota Department of Mineral Resources Director Lynn Helms said North Dakota doesn’t actually have to match New Mexico’s rig count of 81 to beat New Mexico production. A Bakken rig produces almost twice as much as rigs in the Permian, based on data from the Energy Information Administration, the agency that tracks national energy data.
“We just have to get to 50 and then we’ll start to gain on them,” Helms said. So we’ll just keep track of that and we’ll watch that number.”
Well completions for the month were one above the state’s revenue forecast at 41, and prices were 32 percent above forecast.
Crude oil prices are expected to remain high, given the situation with increasing global demand and shorter than usual supply, according to most analysts.
OPEC has signaled it will continue with just 400,000 barrels per day increases. They didn’t actually deliver that much in November, though, which has some analysts wondering whether the cartel can actually deliver on those projections. That could add an edge to prices, if it becomes a trend.
Natural gas prices are also very strong, and that’s likely to continue. U.S. storage is 3 percent below the five-year average as we head into winter, when more gas is typically pulled from storage than is put in.
Drilled but uncompleted wells dropped to 503 in September, and the state hit an all-time high for its active well count, at 17,041. But there’s a troubling trend hiding within the statistics.
“We continue to lose ground on the conventional or the legacy Wells,” Helms said. “And that’s a concern as we move forward into a world where we want to store carbon and we want to use it for enhanced oil recovery. Those are the wells that are going to be the first target for that. So we’re trying to be very strategic about how we approach those wells.”
On the permitting front, permits numbers were down significantly to just 37 in October, as compared to September when there were 69.
That’s not adequate to sustain or grow production, Helms said, but he believes it is an artifact caused by switching to a new database system.
“I noticed particularly last month and the first half of this month that a lot more permits were being filed and were being approved,” Helms said. “So we have some catching up to do in that department. We’ll keep you posted.”
Helms said he is hearing a lot of interest from operators about increased budgets next year. He’s hopeful, based on those conversations, that the Bakken will double the 1 to 2 percent growth rate it saw in 2021. But, he added, Permian sales represent a bit of a “sow’s ear” from the Bakken perspective.
“We’ve had a couple of our major operators go and purchase assets in the Permian and shift a significant amount of their focus to the Permian,” Helms said. “So that would indicate, you know, that we’re not going to see the kind of rapid growth that we saw in 17, 18, and 19. We’re maybe looking at 5 or 6 percent, and you know, like 1 or 2 percent the rest of the year.”
Natural gas production has meanwhile continued to rise in North Dakota. Gas capture is so far keeping pace, but Helms expects a blip in October. Northern Border had substantially reduced capacity for three weeks that month.
“W’ere back into that mode where natural gas is growing much more rapidly than oil, and if anything, that is going to be our constraint going forward,” Helms said.
Recent announcements for gas capture infrastructure have been made, North Dakota Pipeline Authority Justin Kringstad said.
ONEOK, for one, has announced that the suspended Demicks Lake 3 facility is now a go. It will come online the first quarter of 2023 in McKenzie County. The Bear Creek expansion is also set to come online in November as well.
Funding was also allocated by SB 2345 to build a natural gas pipeline that will take natural gas from west to east. That should further ease the situation, while making it easier to win value-added agriculture and other economic development opportunities.
Kringstad said there has been a “tremendous amount” of interest in the west to east pipeline, and regulators are working to finalize details for obtaining that funding.
“(The year) 2022 will be a pretty quiet year for gas processing expansion,” Kringstad said. “There’ll be construction work going on and a lot of planning. But 2023 will be really when we start to see some incremental new gas capacity added in the region.”