After experiencing the largest production decrease in its history in December, North Dakota saw only a weak production rebound in January gaining back just 13 percent of December’s record-breaking production drop.
Revised production data provided by the North Dakota Department of Mineral Resources, DMR, indicate that oil output in December averaged 926,687 barrels per day, a decline of 50,922 bpd from November. Preliminary data for January indicate output was 933,128 bpd, an increase of 6,441 bpd or just 13 percent of the 50,922 bpd lost in December.
There have been only two other production declines in North Dakota over the last 24 months, in November 2012 and January 2013. However, in those two cases, production increased substantially in the following month. Specifically, production in December 2012 recovered 246 percent of the November decline, and in February 2013, 142 percent of the previous month’s production drop was recovered (see chart), unlike the anemic recovery of January 2014.
In terms of production from only the Bakken petroleum system, December’s output was down 46,091 bpd from November, and in January the recovery was 6,031 bpd, also a mere 13 percent recovery. In January, production from the Bakken petroleum system accounted for 93 percent of North Dakota’s total daily output.
What happened to the recovery?
The record-breaking production drop in December was due to severe weather conditions. The state had four large snow storms in December, but then was also plagued with subzero weather and high winds.
But January was warmer and drier than normal in North Dakota, and DMR Director Lynn Helms was initially surprised at the weak production increase. However, on closer look, Helms found two primary reasons behind January’s lackluster output bump.
The first, according to Helms, is the slower than anticipated pace in completing the expansion of the Hess Corp. Tioga gas processing plant. With that plant out of commission, Helms said more than 100 wells in the area were shut in to avoid flaring. However, Helms said Hess is in the process of testing the expanded facility and he is optimistic the plant will be operational by the end of March.
The other factor significantly affecting North Dakota operators in January according to Helms was the wind. “If you think back a couple of months, you’ll recall how many windy, windy days and nights we had,” Helms said. “And so we had no less than 12 days when the sustained winds were too high for any kind of well work. So over a third of the month was occupied by days when you couldn’t use a coil tubing rig to clean a well out or put people on a workover rig to run tubing in a well, or move tubing in or out of a well, so that really impacted production in January.”
“Looking ahead just a little bit,” Helms said, “I’m not real hopeful about February production being a really significant increase because if you recall in February winter really kind of came back and hit us pretty hard. So I’m not terribly hopeful that next month’s production will be … a huge increase.”
Helms did say he was looking at March to be a better month for production, but with the warm weather that came in March, several of the oil producing counties have imposed load restrictions on roads, so there may not be the March “bump” he was looking for.
Completions down
Helms said only 60 new wells were completed in January. As a rule of thumb, DMR estimates that at least 90 completions are required in any given month to generate a production increase. Helms said because of the large drop in completions between November and December, “that 60 well completions translated into about a 6,500 barrel a day increase,” but added that the 6,500 bpd increase was “pretty much breakeven.”
At the end of January, there were 10,100 producing wells in North Dakota. There were another approximately 660 drilled wells waiting on completion, an increase of 25 wells over December.
Natural gas production paralleled the weak oil recovery in January. In December, natural gas output fell by approximately 94 million cubic feet, mmcf, per day, and in January, gas production increased by approximately 16 mmcf per day, for a recovery of 17 percent.
Total U.S. Williston Basin output
Justin Kringstad of the North Dakota Pipeline Authority tracks total U.S. Williston Basin oil production which includes output from Montana and South Dakota as well as North Dakota, and includes all Bakken and non-Bakken production. While total U.S. Williston Basin production broke the 1 million bpd mark in September 2013 and remained above 1 million bpd through November, basin-wide output fell back below 1 million bpd to 999,906 bpd in December. January production data for Montana and South Dakota are not yet available.
