It’s hard to talk about North Dakota oil production these days without talking about setting records, and December production was no exception. But the record is not of the type people are used to seeing as a decline in output in December marks the largest single drop in average daily production in the state’s history.
In November, North Dakota’s daily oil production averaged 976,453 barrels per day, a record high, but by the end of December, preliminary production data indicate the state’s daily oil production averaged 923,227 bpd, a drop in production of 53,226 bpd (see chart).
But the drop in December’s production came as no surprise to Lynn Helms, director of the North Dakota Department of Mineral Resources, the agency that regulates and monitors oil and gas production in the state. Following several months of tepid increases, the state’s production saw a sharp boost of 30,995 bpd in November, which was a month of moderate weather.
However, by the time the November production data were compiled and released on Jan. 14 Helms knew December was a month of rough weather in North Dakota. In a Jan. 14 press conference discussing the November production data Helms said “If you recall, we’ve been talking about the fact that November was a very nice month — we had nice warm weather, dry weather — and we expected a significant surge in production, and we got it after having a fairly low production increase in October,” but then added “December isn’t going to be so nice.” Truer words were never spoken.
“Really the big story in December was the weather,” Helms said in a Feb. 14 monthly press conference. “We had a significant number of days where we saw 21 to 31 degrees below zero Fahrenheit. We had four big snow events across the northern and central part of the state. We had five big wind events.”
Freezing fracks
The most significant impact of weather in December was on hydraulic fracturing. Helms said that at temperatures in the minus 20 to minus 30 degree Fahrenheit range, fresh water used in fracking freezes during frack operations. Helms said some companies have been experimenting with saltwater, but added that at minus 31 degrees Fahrenheit, even salt water freezes. “So they just simply can’t pump hydraulic fracturing jobs when you have 21 and 31 degrees below zero. So that’s the major impact of the cold.”
And with the pace of fracturing slowing significantly due to weather, the backlog of wells awaiting completion increased accordingly with 635 wells now waiting to be completed, an increase of 125 in the last month. And at this point in the winter, Helms said it could be spring before progress is made on that backlog. “That leaves us with an enormous inventory of wells waiting for fracturing,” he said. “So we just have this big, big overhang waiting for hydraulic fracturing and that catch-up may not really come until spring thaw and until load restrictions come off.”
Snow and wind
The heavy snow events interfered with the transport of materials used for drilling and completing wells as well as with the transport of oil from wellsites. “Every day there’s casing and cement and frack sand and water, oil and salt water moving around out there in the 17 oil and gas producing counties, and so the snow really impacts that,” Helms said, adding only 154 wells were spudded in North Dakota in December, the lowest since February 2012.
The strong wind events caused problems with workover rigs setup to complete wells “and they just simply can’t work when the wind is blowing more than about 35 or 40 miles an hour,” Helms said and added that there were five days in December when workover rigs couldn’t be moved to prepare wells for fracturing due to the wind.
“So the weather really was the big news behind December,” Helms said. “It’s just one Alberta Clipper after another.”
A year of record ups and downs
North Dakota’s second largest production decline also occurred in 2013 when output in January fell to 739,086 bpd, a decline of 29,824 bpd from the December 2012 output of 768,910, a 3.9 percent decline. That production drop was due largely to winter storm Gandolf that hit the state in early January and a sub-zero cold snap that hit in late January.
In a year of records, North Dakota also saw its largest monthly production increase in 2013 when output jumped by 50,758 bpd in July following a wet spring and extensive load limit restrictions, an increase of 6.2 percent.
The second largest production increase was in February 2013 when production jumped 42,270 bpd over January to 781,356 bpd. While there was some cold weather in February, it was generally a month of moderate winter weather.
It all goes to show that even with all of the technological advances that have made North Dakota the second largest oil producing state in the U.S. behind Texas, Mother Nature may ultimately have the final say on just how much oil comes out of the ground in North Dakota in any given month.
The December numbers
The adverse weather was also reflected in a number of production statistics, including the average number of days from spudding to initial production for North Dakota wells, which increased by 18 days in December to 132.
The rig count did increase a bit in December standing at 190 compared 184 in November, but at the same time the number of wells completed fell from 138 to 119.
Natural gas production dropped even more than oil production in December averaging 991 million cubic feet per day, a 9.1 percent decline from the 1.09 billion cubic feet produced per day in November. Flaring increased considerably in December rising 6 percent back up to the all-time high of 36 percent (see story on page 1).
In December, there were 10,015 wells producing in North Dakota, down slightly from 10,042 that were producing in November. Of those 10,015 wells, 6,803 or 68 percent are unconventional wells producing from the Bakken and Three Forks formations with the remaining 3,212, 32 percent, legacy conventional pool wells. Of North Dakota’s 923,227 bpd output in December, 862,978 bpd, 93 percent, came from the Bakken and Three Forks formations. The remaining 60,249 bpd or 7 percent was legacy production. Consequently, 68 percent of the state’s oil wells accounted for 93 percent of the state’s output in December.
Even though North Dakota began and ended 2013 with monthly production declines, the net average daily production increased by 184,141 bpd for the year.
