July 24, 2013

County is No. 1 in oil, gas production

By Kate Ruggles
Farmer Staff Writer

McKenzie County has been one of the top three oil and natural gas producers for some time now. Then, in March, McKenzie County surpassed Mountrail County, the leading county for almost a year, to become the highest producer of oil and natural gas in North Dakota. After three months, and without the help of a state recognized hub city, McKenzie County is still the lead producer of oil and natural gas in North Dakota.
According to Lynn Helms, director of Mineral Resources for the North Dakota Industrial Commission, McKenzie County finished the month of May producing 6,761,373 barrels of oil, over 500,000 more barrels than the state’s second highest producing county, Mountrail. Additionally, McKenzie County nearly doubled the state’s second highest natural gas producer, Williams County, producing 10,061,802 million cubic feet (MCF).
And all of this production came in spite of an overly wet and snowy spring, which caused an extended period of road restrictions and delayed frack crews from completing an even higher number of wells than in April.
“May’s production numbers were really a happy surprise,” states Helms. “We finally broke through that 800,000 barrel per day number, which is something we’ve been looking forward to for some time.”
Helms reports that the state of North Dakota produced a new all-time high of 810,129 barrels of oil per day (bpd) and another new all-time high of 899,977 million cubic feet (MCF) of natural gas.
“That is almost a 17,000 bpd increase from April to May,” states Helms.
Not only are the numbers an increase over the previous months production totals, but they are also more than the North Dakota Legislature planned into its budget.
“May’s numbers are 5,000 bpd higher than what is built into the state’s revenue forecast,” states Helms. “Along the same lines, the May oil price of $87.94 per barrel is about 17 percent higher than what is built into the revenue forecast as well.”
According to Helms, the implications of those numbers indicate a potential surplus of funds for North Dakota.
“We purposefully tried to be conservative on our production numbers,” states Helms. “We don’t want to promise more than we can deliver.”
While that looks to be good news for the state of North Dakota, Helms states that another stockpile has started building, and unless it balances out, it will begin to affect production.
“Drilling rigs in May continued to out-pace completion crews due to an increase in moisture,” states Helms. “The result was 500 wells waiting on frack service, an increase of 10 over the month of April.”
Helms states that drilling companies have focused in on 22 days from spud or origin to total depth. But on the completion side, the time from total depth to production has grown from around 60 to 70 to now around 92 days.
“This has largely to do with the logistics of moving fracking equipment and materials to the wells,” states Helms.
According to Helms, rig counts have hovered at around 180. But, while the industry would like to increase that number, there is no reason to with the large number of wells waiting on completion.
“Service companies have indicated to the Industrial Commission that they intend to bring in additional personnel and trucks, in order to catch up on the number of uncompleted wells,” states Helms. “This means we will see an increase of people in the Minot, Dickinson and Williston areas, and an increase in frack crews.”
If companies are able to catch up on the number of uncompleted wells, Helms states that the North Dakota Industrial Commission expects an even larger monthly increase in production.
“The June, July and August production numbers could definitely exceed the 17,000 bpd increase we saw from April to May,” states Helms.
In fact, Helms states that as companies catch up on their inventory of uncompleted wells, he is anticipating a potential increase of 20,000 bpd during June, July and August.