June 19, 2013

Oil, natural gas production sets new record

By Kate Ruggles
Farmer Staff Writer

In spite of a late spring with snow and unseasonably cold temperatures that put drilling and fracing work on hold in North Dakota’s oil patch, the North Dakota Industrial Commission says that April was another record-setting month for oil and natural gas production in the state.
And the growth of production during the winter months reveals a lot about the potential for production over the summer.
In the month of April, 793,249 barrels of oil (bpd) and 860,398 million cubic feet of natural gas were produced per day in North Dakota. And for the second month in a row, McKenzie County was the leading producer.
McKenzie County produced an average of 6,310,655 barrels of oil and 9,196,803 million cubic feet of natural gas daily, while also having the highest number of drilling rigs in the month of April.
According to Lynn Helms, director of Mineral Resources for the North Dakota Industrial Commission, the Industrial Commission is hoping the state will soon start producing over 800,000 barrels of oil per day. The hope was that the state would have reached that goal by June, but Helms states it is not likely to happen until July.
However, April put the Industrial Commission that much closer to reaching its goal of 800,000 bpd. And it did so among tremendous challenges.
“This April was the coldest on record and there was a snowstorm in the middle of the month that put 80 percent of the state’s highways on a no-travel advisory,” states Helms. “Then it went right from that to being an incredibly wet May. The weather is only just now starting to let up.”
Additionally, Helms states that 490 wells, a large portion of which are in McKenzie County, were left waiting on hydraulic fracturing service.
“Drilling rigs continue to outpace frac crews and their ability to get wells producing,” states Helms.
It is due, in large part, to the fact that it takes an average of 22 to 23 days to drill a well and 110 days to frac it.
“The industry is trying to close the gap between drilling and fracing, but it is difficult,” states Helms.
On top of the need for faster fracturing service, however, is the fact that the oil industry has not been able to catch a break with regard to the weather.
Cold temperatures and snowfall really slowed production, according to Helms, which the production numbers from January to April confirm.
The reason April’s production numbers give the Industrial Commission hope is that even though there were cold temperatures, a snowstorm, and 490 wells waiting on hydraulic fracturing service, North Dakota still set a record for production.
“If we can complete 90 to 100 wells in a month, we can increase our production numbers. And in April, despite all odds, we put almost 120 wells on line,” states Helms. “That gives you an idea of the kind of flows we will see when we hit the summer months.”
Even though the late and wet spring could make this a short summer, Helms states that the Industrial Commission still expects to see a big surge in production in the months of July and August, with roughly 190 to 200 drilling rigs operating by July 4.
According to Helms, the Industrial Commission also expects the summer surge to bring the number of wells waiting to be fraced down to around 150.
In addition, the Industrial Commission is participating in a $150 million study of the deeper benches of the Three Forks Formation in McKenzie County.
“The work is really early as far as how many wells, and what the overall potential is going to be,” states Helms. “But I think the impact of the lower Three Forks benches will result in an extended peak in production. Instead of hitting a peak and declining in a year or two, we could see a decade of peak production rates.”
According to Helms, so far the preliminary results are very exciting and the industry has a lot of plans with regard to drilling and development in the Three Forks Formation.