Williston Basin Oil Production back on track in January

The monthly total for December was 29,693,769 barrels of oil produced in North Dakota, compared to a preliminary total of 32,881,946 barrels in January 2023, the NDPA reported.

U.S. Williston Basin oil production was "back up over a million barrels per day, as weather conditions improved for the month of January," said ND Pipeline Authority Director Justin Kringstad during the ND Mineral Resources monthly Director's Cut media conference.

"Some good news," he said, citing a ONEOK February earnings call in which the company stated it saw record numbers of drilling productivity in North Dakota "for gas capture and gas flow into their system."

Because ONEOK has one of the biggest footprints in North Dakota, "we should be at record gas volumes," Kringstad said, with the caveat that the positive pattern "translates consistently across the state."

Gas capture productivity increased a full percentage point from December to January, he said.

"So, again, very very positive news on the gas-capture front," Kringstad said. "Historically, we've continued on this real strong trend now, well over a year or two. And I anticipate that we're going to continue to see this strength … and possibly even more in the years ahead."

On the transportation front, 84% of Williston Basin Oil was exported via pipeline, compared to 9% over rail.

"In January, no major upsets to the pipeline system," Kringstad said. "As we go into February, there was one upset. … That was relatively short, but it did reduce capacity."

Adverse weather conditions usually disrupt the transportation of oil through trucks because of road closures. In fact, road closures did cause problems in December, Kringstad said, noting that both North Dakota and South Dakota struggled with weather issues at the close of 2022.

"But I do anticipate [SD] production to pop back up as we get into the warmer months," he said.

Director of ND Dept. of Mineral Resources Lynn Helms followed up Kringstad's report with more good news for early 2023.

"January was a very good month," Helms said during the monthly Director's Cut conference call. "About a 6% increase in oil production. The last half of January and most of February, pretty good weather."

Revised revenue forecasts estimate a 6.1% increase in oil barrels per day from December to January, according to the report. With 96% of the state's oil production coming from Bakken and Three Forks, 1,022,986 barrels/day were produced in the region in January.

Helms said the department is anticipating a drop in oil production in early spring due to severe weather.

"March looks like it could be a bit of a struggle," he said. "Above a million barrels a day, but we are seeing impacts from difficult transportation for crude oil … to the pipeline system."

The ND Mineral Resources report showed final gas production and capture in December 2022 at 81,948,643 MCF (1,000 cubic feet) versus a preliminary estimate of 87,871,026 MCF in January 2023.

"A little bit higher increase in gas production," Helms said. "Looking forward into February, the gas numbers look very strong."

Although natural-gas production was up in January compared to December, Helms warned that prices would likely remain low throughout 2023.

"Some really interesting stuff in the U.S. natural gas market," he said. "Natural gas storage around the United States is 22% above the five-year average. And so natural gas prices are really in the tank.

"We're down in the range we saw around the pandemic," Helms continued. "That puts a lot of stress on the system. It's very difficult to make progress on gas capture."

The ND report for December 2022 and January 2023 showed a significant improvement in gas capture from month to month, with a 94% capture of 76,647,186 MCF in December to 83,084,273 MCF (95%) in January.

"Happy to report … we did see that pick up about 1%," Helms noted. "So we're at 95% gas capture in January, and it looked like that should have held in February. And certainly is holding strong. So operators really are biting the bullet and working hard to maximize gas capture."

Bakken oil rig counts were up slightly in January (46) from December (44), according to the state report. More importantly, the number of inactive rigs were down significantly month over month, with 2,613 inactive rigs reported in December compared to 1,998 in January.

Helms referred to the well counts and completions data in January 2023 as extremely positive.

"Really good news in the inactive wells, January to December," he said, attributing it to less severe weather.

"The 2,600 inactive wells that we had in December dropped off by almost 700 wells to less than 2,000," Helms said. "We really like to see that number down in that range, with roughly a little over 17,000 wells capable of production."

Helms spoke briefly about challenges in the ND legislature, which is trying to balance the state budget without sacrificing subsidies to oil and gas companies. In other words, state lawmakers are struggling with containing spending while keeping North Dakota's most vital industry economically vibrant.

"They're working hard now to try to bring grant dollars down, and agency budgets down to get the budget into balance," Helms said, noting that draft legislation is likely to change as the law-making process moves forward.

"The bills aren't going to look the same coming out of the second House," he said, citing "crossover" as a major factor in how bills are frequently rewritten to reflect the needs and demands of vital industries and voters as bills move from the state Senate to the House.

Nevertheless, Helms said ND lawmakers are working hard to keep grants alive for gas capture.

"We don't want to lose momentum," he said of current proposals to "incentivize gas capture" for companies doing business in ND.

"Spring is coming next week, but not necessarily to North Dakota," Helms joked. "We have to look at meteorological spring in North Dakota."

Both Helms and Kringstad frequently alluded to the state's snow and near-zero temperatures during their March Director's Cut session covering the January ND oil and gas production report.

"We're already experiencing a downturn for March from the month of February," Helms said, citing adverse weather in early March. "Crude oil transportation really took a hit, and we haven't really fully recovered from that."