OPEC, Permian will influence future ND oil production

By Patrick C. Miller | May 16, 2017

North Dakota’s oil production declined by 1 percent in March, but continued to stay above the 1 million barrels per day mark.

The state’s future production will be linked to how OPEC responds to increased activity in the Permian Basin of Texas, according to Lynn Helms, director of the North Dakota Oil and Gas Division. He noted that OPEC will meet at the end of May to decide whether it will keep in force the production cuts implemented last November which contributed to oil prices rising above $50 a barrel.

Helms said it’s been assumed that the organization would continue to limit its production. However, he noted that because OPEC is having doubts and concerns that with 15 rigs per month being added in the Permian and production from the shale play going up 150,000 barrels per day, the organization might be inclined to let the production cuts lapse.

If that happens, Helms said it would likely cause world oil prices to fall, which would result in North Dakota’s oil production once again dropping below 1 million bpd. He said that at current prices, there’s small chance North Dakota production could fall below a million barrels per day in the next month or two before rebounding in the second half of the year.

From February to March, North Dakota crude production fell from 1.034 million bpd to 1.026 million bpd. Gas production increased from 1.7 million cubic feet per day in February to nearly 1.73 million cfpd in March, a 1.4 percent increase. The state’s rig count increased from 46 in March to 50 in April and to 51 in May.

Helms said the key to increased gas production during March was more wells being completed in the core of the Bakken. He also noted that the state had set a new record in the number of producing wells—13,632.

Helms shared breakeven costs for counties in which the most activity is occurring. In McKenzie County, which has 24 rigs operating, the breakeven cost is $21 per barrel. Others include Dunn at $23, Mountrail at $25 and Williams at $28.

Two other trends of interest were a large drop in the number of drilled but uncompleted (DUC) wells and an increase in inactive wells being brought back online.

“This is the biggest month-to-month drop for wells waiting on completion that we’ve seen,” Helms said, reporting the number of DUCs in the state fell from nearly 800 in February to 689 in March.

The last time North Dakota saw a triple-digit reduction in DUCs was October 2015 when 105 wells were completed. In addition, Helms said 312 wells came back into production.

Despite the increase in gas production, Helms said producers continued to easily meet flare reduction goals set by the North Dakota Industrial Commission. Statewide, producers are capturing 90 percent of the gas stream.