July 14, 2015

County leads state in oil, gas production

By Kate Ruggles
Farmer Staff Writer

McKenzie County continues to lead North Dakota in both oil and natural gas production according to the latest report from the North Dakota Department of Mineral Resources.
During the month of May, McKenzie County produced 13,243,028 barrels of oil and 22,330,958 MCF of natural gas, which represents 35.6 and 44.3 percent, respectively, of the state’s production totals.
Statewide, the report shows a marked increase in production from April to May, bringing the state’s production totals even closer to the state’s all-time production high which was set in December of 2014.
In May, North Dakota produced 1,201,159 barrels of oil per day and 1,625,625 MCF of natural gas per day, which is nearly one million barrels of oil and two million MCF of natural gas more than was produced in April.
According to Lynn Helms, director of Mineral Resources for the North Dakota Industrial Commission, the number of well completions rose slightly from 102 completions in April to 114 completions in May. But initial production rates are increasing 10 to 20 percent per month as drilling and completions focus more and more on the best portion of the core Bakken and Three Forks areas.
In fact, to date, over 98 percent of drilling now targets the Bakken and Three Forks formations.
“At the end of May, there was an estimated 925 wells waiting on completion services, which was the same as at the end of April,” states Helms. “To maintain production near 1.2 million barrels per day, 110 to 120 completions must be made per month.”
While North Dakota’s rig count is dropping, the state is continuing to see a significant production increase. From April to May, the rig count fell from 91 to 83 and then dropped five more from May to June. As of July, the rig count is holding at 73.
“The statewide rig count is down 67 percent from the high of 218 on May 29, 2012,” states Helms.
However, though counts are down, the concentration of drilling rigs is still highest in McKenzie County.
“Operators are continuing to experiment with running one to two fewer rigs than their planned 2015 minimum to see if drill times and efficiencies will continue to improve,” states Helms. “This has resulted in a current active drilling rig count that remains five to eight rigs below what operators indicated would be their 2015 average if oil prices remained below $65 per barrel.”
The price of North Dakota Sweet Crude in April was $38.33 per barrel before increasing to $44.70 in May, and to $47.73 per barrel in June. Helms reports that today’s sweet crude price has dropped to $40.75 per barrel.
Helms anticipates that the renewed oil price weakness will last into next year, and will continue by far to be the main reason for the production roller coaster. In other words, production will not stabilize until pricing does, which is not expected to occur until the second half of 2016.