ND oil production up 7 percent, returns above 1 million barrels a day

Stronger oil prices in October prompted a 7.4 percent increase in North Dakota oil production, bringing daily production back above 1 million barrels per day, the Department of Mineral Resources said Tuesday, Dec. 13.

The state produced an average of 1,043,207 barrels per day in October, a result of operators opening up wells that had previously been restricted due to low oil prices, said Director Lynn Helms.

The price for a barrel of North Dakota sweet crude was above $40 in October, the first time that price point was sustained in 18 months, Helms said.

But the gain in October, which followed two months of production declines, is expected to be temporary despite increases in the price of oil. North Dakota winter weather can make hydraulic fracturing and other operations extremely expensive and difficult, making it “highly unlikely” that production will stay above 1 million barrels per day, Helms said.

“If we have a tough winter, we’ll go back to that trend of production declines,” Helms said.

The jump in oil production contributed to an uptick in oil traveling by rail in October, said Justin Kringstad, director of the North Dakota Pipeline Authority.

An estimated 400,00 barrels per day was transported by rail in October, an increase from recent months but about half the amount that traveled by rail during peak months in 2014. Kringstad attributed some of the increase to oil from Canada that was transported on North Dakota’s rail system in October.

Overall, 35 percent of oil was transported by rail in October and 55 percent was transported by pipeline, Kringstad said.

North Dakota set a new record for natural gas production in October, averaging 1.7 billion cubic feet per day.

Natural gas flaring increased from 11.4 percent in September to 14.6 percent in October due to disruptions on the Alliance Pipeline.

The pipeline, which primarily transports Canadian natural gas but also connects with some North Dakota production, was temporarily out of service to accommodate some highway work near Regina, Sask., Kringstad said.

“We should not see this impacting the November figures and going forward,” he said.

North Dakota now has 13,457 producing oil and gas wells, a new all-time high based on the preliminary figures.

The state has 40 drilling rigs operating Tuesday, compared to 65 one year ago and 181 two years ago at this time.

Operators indicate they plan to reach a rig count of about 50 by the middle of next year, Helms said.

The number of wells that have been drilled but are waiting on fracking crews was estimated to be 860 at the end of October. The state also had an estimated 1,503 inactive wells at the end of October.

“There’s still a backlog of wells waiting to be fracked and wells waiting to be returned to production,” Helms said.