One million barrels per day is Bakken shale's new normal

By Patrick C. Miller | September 18, 2017

North Dakota’s oil production remaining above 1 million barrels per day for the foreseeable future is “the new normal,” according to Lynn Helms, director of the state’s Department of Mineral Resources.

During July, North Dakota’s crude production from the Williston Basin rose to 1.047 million barrels per day, an increase of about 15,000 bpd (1.4 percent) over the previous month. Gas production hit an all-time high of 1.876 million cubic feet per day, also an increase of 1.4 percent.

Helms pointed out that over the past year, producers have changed how wells are completed, a factor that’s caused North Dakota’s oil and gas production increases to mirror each other.

“Companies have discovered that bringing wells on slower and restricting that initial production makes for a better well long term,” he explained. “We’re seeing people not trying to beat the record for initial production. They’re actually thinking about the reservoir and the frack sand they pump in, and they’re being more cautious with it.”

Helms said that hurricanes Harvey and Ivan created a temporary surge in U.S. oil inventories, but worldwide, inventories are declining and demand is increasing. When these factors are combined with OPEC continuing to maintain discipline on production cuts, he believes oil prices will average $50 a barrel before the end of the year and go even higher in 2018.

“This is good news as oil companies begin to build budgets for next year,” Helms said. “I have a lot of confidence that by the end of the year or early next year, we’ll see sustained $50 oil—or a little higher.”

Helms pointed out that after weak oil prices during June and July, they’ve rebounded somewhat in August and September.

“It appears like we’re heading for a soft landing on prices, and that’s what I think everybody would like—as opposed to a more sudden spike in price or a drop in price,” he said.

Helms stated that there are currently 24 frack crews operating in the state to service 56 rigs. He noted that the current number of rigs and crews is enough to maintain production and also help reduce the 860 uncompleted wells in the state.

On another note, Helms said he calculated that the oil and gas industry has invested $125 billion in North Dakota over the past 10 years. That figure includes well drilling and completions, pipelines and gas processing plants, but not housing, transportation and utilities infrastructure.

“It’s a pretty stunning number when you think about the investors around the world that the would be willing to spend that kind of money in the state,” he said. “It becomes easy to understand what a driving force that was for our economy and our state revenues.”