North Dakota oil output upDaily production in February hit new high as rig count increases, more fracturing crews move to state and idle well count falls Alan Bailey Petroleum News
With an estimated average rate of 558,254 barrels per day, oil production in North Dakota reached a new high in February, according to the April “Director’s Cut” report by Lynn Helms, director of North Dakota’s Department of Mineral Resources. Natural gas production, at 601,292 thousand cubic feet per day, also hit a new peak, Helms says.
According to data on the Department of Mineral Resources website, oil production a year earlier was 348,777 barrels per day, with the production rate increasing every month over the course of the year.
Insufficient pipeline capacity Oil production in North Dakota now significantly exceeds the capacity of the oil pipeline network for transporting the oil to market. Delay and uncertainty in the approval of the Keystone XL pipeline, and a bottleneck at Cushing, Okla., has resulted in the price of North Dakota Sweet being discounted 25 percent below West Texas Intermediate, and West Texas Intermediate being discounted 19 percent below Brent crude, Helms said.
However, arrangements for the transportation of North Dakota oil by rail and truck are adequate to keep up with near-term production expectations, he said.
North Dakota natural gas production is rising, while the warming weather is enabling the construction of processing plants and gathering systems to accelerate. However, with U.S. gas storage levels currently 61 percent above the five-year average, gas prices seem set to remain low. The price of natural gas delivered to Northern Border at Watford City has dropped to $1.65 per thousand cubic feet, Helms said.
Exploration for shallow natural gas is not economic in North Dakota at present, he said. However, the high liquids content of deeper gas from the Bakken formation does make production of this gas viable. And, with new additions to gas processing capacity beginning to take effect, the percentage of gas flared has dropped to 30.4 percent from a high of 36 percent in September 2011, Helms said. Gas flaring should continue to decline, he said.
More fracturing crews moving in Meantime drilling in North Dakota continues apace.
Rig counts in the Williston basin are at record levels in excess of 200 rigs and are slowly increasing, with more than 95 percent of the rigs capable of drilling to more than 20,000 feet in use. But only about 50 percent of shallow-well rigs, designed for drilling to 7,000 feet or less, are being used, Helms said. The idle well count is falling, with about 240 wells waiting for fracturing services. More fracturing crews are moving to North Dakota from natural gas plays, Helms said
Over 95 percent of the drilling is targeting the Bakken and Three Forks formations, he said.
Drilling permitting activity is high, although well below record levels. And seismic surveying is very active, with six surveys currently in progress.
Environmental Protection Agency regulation of hydraulic fracturing remains on hold while the Obama administration’s Office of Management and Budget, or OMB, reviews the proposed guidance documents. EPA plans a 60-day public comment period after the OMB review, Helms said.
Most North Dakota leasing activity currently consists of lease renewals, or the purchase of so-called “top leases” on land already leased, he said.
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