While oil production in North Dakota reached yet new record highs in April, Lynn Helms, director of the Oil and Gas Division of the state’s Department of Mineral Resources, says the April production statistics are simply “more of the same” in that the numbers continue a slow but steady overall increasing trend in the state’s oil production. The pace of production has been hampered through the winter and spring by adverse weather conditions, and spring road restrictions have hampered production even more.
However, Helms believes that trend is about to change, and he said in a monthly press conference held jointly with the North Dakota Pipeline Authority on June 14 that he is anticipating a surge in production this summer. July and August are typically very warm months with long days, Helms said, during which a “tremendous” amount of work can get done. “We expect a big surge in production coming up in the summer months,” he said, but added that “it may be a very short summer. I’ve started counting the months until Halloween, and there aren’t very many left, and that’s usually when winter arrives.”
April production in the state hit a daily average of 793,249 barrels of oil per day, up 1.3 percent from the average production of 782,999 bopd in March, itself a record high. Helms said April’s production is approaching a milestone level of 800,000 bopd, which he said will be “new territory,” and will “likely come in the next month or so.” (Bakken petroleum system oil production in April was 662,788.8 barrels of oil per day as compared to 658,835.7 barrels in March. See breakdown by company and a list of Top 50 North Dakota Bakken Oil Producers in this issue’s Bakken Stats section that starts on page 9.)
Natural gas production also hit a new high in April at an average of approximately 860 million cubic feet per day, up 3.2 percent from March gas production. Another 119 wells went on production in April, bringing the total number of producing wells in North Dakota to 8,758, another record high. “It’s difficult when you set all kinds of new records, and you just call it more of the same, but that’s North Dakota these days,” Helms said.
Drilling outpacing completions
While the state set new production records in April, the number of wells waiting on completion also increased, and Helms estimates that there are currently some 490 wells that have been drilled but are yet to be fracked, 50 more than in March. The reason for the backlog, he said, is “because industry just has not been able to catch a break with regards to weather.”
April, Helms said, was the coldest April on record. In addition, there was a big snow storm in the state in April, which, he said, put about 80 percent of state highways under a no-travel advisory. “And we went right from that to the wettest May in western North Dakota.”
Road restrictions have also hampered fracking operations. Helms said there are still road restrictions in some areas, including the northern tier in Divide, Burke and Renville counties. “I can’t remember any time when I was working in the oil industry or in this job in North Dakota when we still had road restrictions until Father’s Day. Almost always those are gone by Mother’s Day.”
But with the coming of summer, Helms expects industry to make significant progress on the fracking backlog, and he believes the number of wells waiting on completion will fall to 200 or even 150 in short order. That alone will significantly add to the state’s production.
The key to growing production, Helms said, is to complete and bring on production between 90 and 100 wells per month, and with the 119 added in April, the state is on track to meet projections. The North Dakota legislature used an estimate of 850,000 bopd for the state’s 2013-15 revenue projections. “I actually think, based on the number of wells waiting for fracking and the continued drilling activity, we’ll probably beat the forecast,” Helms said. “If anything, it’s going to be on the conservative side.”
Rig count
Weather and road restrictions have also impacted the state’s rig count. As of June 14, there were 184 rigs operating in North Dakota, a decline of seven rigs from the 191 rigs that were operating on May 15, although that number fell to 187 by the end of May. The rig count in March and April was steady at 186.
Helms said the industry had hoped the rig count would be in the upper 190 range by mid-June. However, he said there is optimism that the rig count will get back into the upper 190-range or even to 200, but he said that will be after the Fourth of July at the earliest.
Helms said some of the rigs that would otherwise be operating in North Dakota are working in Montana because of the road restrictions. In addition, he said some older mechanical rigs have been retired early, and he added that he recently spoke with an operator that retired a couple of those older rigs, which will be replaced later in the summer with new “space-age” rigs.
Drilling permits and crude oil prices
A total of 211 drilling permits were issued in May, up from the 202 issued in April but down from the 218 issued in March. Currently, more than 95 percent of drilling activity in North Dakota is targeting the Bakken and Three Forks Formations.
Helms also noted that the price of Bakken crude oil has been holding steady, fluctuating less than $2 per barrel over the last six to nine months. As of June 13, North Dakota sweet crude was priced at $86.75 on the Flint Hills Resources crude oil postings.
“Amazingly steady in terms of rig count, oil price and the activity, with the exception of the weather interruptions,” Helms concluded.
—Mike Ellerd
