‘Unique territory’The 1 million bpd mark puts North Dakota in top 20 world oil producers Mike Ellerd Petroleum News Bakken
Daily oil production in North Dakota finally hit the long-awaited 1 million barrels of oil per day mark in April. Average daily oil production increased in April for the fourth consecutive month, and while the April increase was slightly less than in March, it was enough to push the state’s production over the milestone. And that milestone puts North Dakota in a club with very few members.
According to Department of Mineral Resources Director Lynn Helms, only three other U.S. states have ever achieved 1 million bpd production: Texas, Alaska and California. However, production in Alaska fell below the 1 million bpd mark in 2003 and California in 1986, leaving North Dakota and Texas as the only current 1 million bpd producing states. To the north, only one Canadian province, Alberta, has reached the 1 million bpd mark.
But to really put the 1 million bpd mark in perspective, that number needs to be considered on a global scale. Helms said there are 115 countries worldwide that produce crude oil, but only 20 of those produce more than 1 million bpd. So with April production, North Dakota now ranks among the top 17 percent of oil producers in the world. “Pretty unique territory,” Helms said of North Dakota’s position in the global oil market in a June 17 press conference.
And what does the 1 million bpd mark mean in terms of revenue to the state of North Dakota? On June 13, North Dakota Light Sweet settled at $91.75 per barrel on the Flint Hills Resources Midcontinent oil market. Coupling that price with the state’s current combined extraction and production tax rate of 11.5 percent, that pencils out to more than $10 million per day in gross revenue to the state. “That’s a lot of money to be spent on infrastructure and things in the state of North Dakota,” Helms said.
Better months and years ahead The preliminary April production numbers, released by DMR on June 17, indicate North Dakota averaged 1,001,149 bpd production in April, an increase of 23,961 bpd or 2.45 percent over March, but less than the March production increase of 2.64 percent over February (see chart). And while the number of wells waiting on completion declined by 35 wells from March, there were still 600 wells awaiting completion at the end of April, a significant backlog.
Helms noted that April was a month of adverse weather with periodic heavy rains contributing to road restrictions and between nine and 11 days when high winds shut down completion activities. “So the big surge in production has not yet happened as of the end of April,” Helms said. “We had a … 23,000 barrel a day increase, but there are larger increases to come as we move into May, which had much better weather, and the current month, June, which … has been beautiful.” And looking ahead, Helms expects production to remain well above the million bpd level through the summer and going into winter.
Looking further into the future, Helms said his department is looking at production to continue to grow through 2017 reaching an ultimate maximum of some 1.5 million bpd, but after 2017, Helms said, it’s expected that production will stabilize. “At that point the slowly declining individual well production is going to catch up with the ability to add new wells to the system,” Helms said, but added that production is expected to remain in that 1.5 million bpd range for perhaps another 10 years. “However, we think that the increased efficiency in drilling and completions is going to allow industry to sustain that million-and-a-half barrels a day for 10 years or so before we actually have so many wells in decline mode that we can’t stay ahead of them.” But that, Helms said, is good news “because it gives us a little more than a decade to really develop enhanced recovery processes - something that would bring some of those wells back to life.”
The April numbers Of the 1,001,149 bpd production in April, 94 percent came from Bakken and Three Forks pools with the remaining 6 percent coming from conventional “legacy” pools. The number of wells on production increased by 186 in April bringing the total number of producing wells to 10,658, 69 percent of which were producing from Bakken and Three Forks pools. Natural gas production increased in April by 4.4 percent over March to 1.13 billion cubic feet per day.
The drill rig count at the end of April stood at 188, down five from March. At the end of May the rig count stood at 189 and remained at 189 as of June 17. The utilization rate for drill rigs with a 20,000-foot capability or greater was above 90 percent in April and was approximately 60 percent for shallower rigs with capabilities of 7,000 feet or less.
A total of 200 wells were completed in April, consistent with March. DMR issued 233 drilling permits in April, down slightly from the 250 issued in March. In May, 234 permits were issued.
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