Bakken's increased production shows industry confidence

By Patrick C. Miller | June 13, 2017

Continued increases in North Dakota’s oil and gas production during April indicates that industry is confident in the fundamentals of the Bakken.

This was the assessment of Lynn Helms, director of the state’s Department of Mineral Resources, as he delivered his monthly report Tuesday outlining production statistics.

Oil production of 1.05 million barrels per day (bpd) was an uptick of 25,000 bpd, which represents a 2.4 percent increase over March. Gas production reached an all-time high of nearly 1.84 million cubic feet per day, a 6 percent increase from the previous month.

“That’s a very large increase,” Helms said. “It indicates again concentration on the core area where oil is produced with a lot more natural gas.”

The good news, Helms related, was that despite the large increase in gas production, the state flared just 10 percent of the gas, remaining well within the gas capture limits set by the North Dakota Industrial Commission.

However, Helms stressed that there is concern on trust lands within the Fort Berthold Reservation where delays in permitting right of ways for new gathering pipelines could lead to increased flaring. He cited one example of a right of way holding up a pipeline for four oil fields that’s lasted three years with no end in sight.

“It’s a very convoluted process that makes it almost impossible to get a right of way,” he said. “We really need to do something to correct that problem.”

The number of producing wells in North Dakota also hit a new all-time high of 13,717. Permitting activity during May was up significantly over April with 100 drilling and two seismic permits requested. In addition, 55 drilling rigs are currently operating in the state.

“Industry appears confident that the fundamentals are there,” Helms noted. “Regardless of what you’re seeing short-term on oil prices, fundamentally, inventories are going to come down, OPEC production cuts are going to do their job and we will see stronger prices out into the future.”

Mergers and acquisitions made by smaller companies are also playing a role in the state’s increased activity, Helms said, with some adding rigs in areas that might normally see drilling.

The number of wells completed decreased slightly from 61 in March to 59 in April, indicating that those being completed are very productive.

“Along with that, we’re seeing some companies opening wells up more to their full potential,” Helms noted. “With better oil prices, they’re not restricting wells as much.”

A large increase in the number of uncompleted wells indicates that the drilling rigs are outrunning the frack crews, Helms said.

“You can see that in the job numbers as well,” he explained. “Industry’s intention is to get to 25 crews this year, but they’re well short of that. They’re somewhere below 20 and they’re really struggling to hire qualified people.”

Many of the most qualitied workers went to Texas and Oklahoma when activity picked up ahead of North Dakota.

“If you go on the websites, you’ll see close to 200 frack crew jobs listed for North Dakota, which would probably be enough to man four additional crews or more that they’d like to put in the field. With 55 rigs and less than 20 frack crews, they won’t be able to keep up.”

He said the number of drilled but uncompleted wells in North Dakota could move up in the next few months.