June 24, 2014

State reaches oil milestone

By Kate Ruggles
Farmer Staff Writer

The big news, both for North Dakota’s oil industry and the state of North Dakota, is that April’s production numbers have been tallied and reveal that North Dakota has finally reached the milestone of producing over one million barrels of oil per day.
“Reaching the one-million-barrel-a-day mark is a tremendous and timely milestone for the petroleum industry and our state,” states North Dakota Sen. John Hoeven.
This is a milestone that the North Dakota Industrial Commission has been anticipating for quite some time. Production in early 2014 was hampered by an extremely cold North Dakota winter and the shutting down of the Tioga Gas Plant for the purposes of expanding its gas capturing ability in order to reduce flaring. But in April, North Dakota finally reached a level that not many oil-producing states or countries have reached.
“It is big news when you look at the world of crude oil production,” states Lynn Helms, director of Mineral Resources for the North Dakota Industrial Commission. “Only three states have ever exceeded producing one million barrels of oil a day - California, Alaska and Texas. But only Texas is still producing at that level.”
Helms further states that the Canadian province of Alberta also produces over one million barrels of oil per day. And that of the 115 countries in the world that produce crude oil, only 20 of them produce at or over the level that North Dakota just reached.
Additionally, Sen. Hoeven believes that the recent events in Iraq, Syria, Ukraine and elsewhere in the world continue to teach us that we must build our domestic energy resources and reduce our reliance on Middle Eastern oil to strengthen America’s national and economic security.
“We celebrate and congratulate all who have worked so hard to bring North Dakota to this historic watershed,” states Hoeven.
According to the North Dakota Industrial Commission, North Dakota produced a total of 1,001,149 barrels of oil per day during the month of April. It was an increase of almost 24,000 barrels over the month of March, which is why Helms does not believe we have yet seen the big surge in production the Industrial Commission has been expecting.
“April was not a particularly great month. We lost three days due to a big rain storm and load restrictions on county roads. And there were nine to 11 days where the wind blew hard for completion activity,” states Helms. “We ended April with 600 wells waiting to be tracked.”
Helms believes that there are larger increases yet to come as the production numbers for May and June roll in.
North Dakota also produced 1,133,742 MCF per day of natural gas.
McKenzie County was still the leader of oil and natural gas production among North Dakota’s oil and gas-producing counties. However, the April numbers were actually lower than what McKenzie County produced in March.
In April, McKenzie County produced a total of 9,576,841 barrels of oil and 14,286,047 MCF of natural gas. That is roughly 319,228 barrels of oil per day and 476,201 MCF of natural gas a day. These numbers are approximately 100,000 barrels of oil and 100,000 MCF of natural gas less than what was produced in March in McKenzie County.
On top of reaching a milestone in oil production, Helms states that oil prices are incredibly good. While this fact is likely due to the unrest in the Middle East, it only adds to the news of North Dakota’s oil production.
“Currently, tax collections from oil and gas production in the state of North Dakota exceed $10 million a day,” states Helms. “That is a lot of money to be spent on infrastructure in the state.”
With regard to flaring, Helms also states that he has not seen the drop in flaring he has been hoping for. But that is largely due to the fact that the Tioga Gas Plant was not fully online until the end of April.
“In April, flaring stayed at around 30 percent, but we should see improvement in gas capture and flaring as we total May’s numbers,” states Helms.
At the beginning of the month, the North Dakota Industrial Commission began requiring gas capture plans along with permit requests, to continue the work of reducing flaring and achieve 90 to 95 percent gas capture by 2020. On July 1, the Industrial Commission will begin collecting gas capturing plans for wells that have already been completed and have been producing oil.
Helms states that permitting activity is still strong, and the state’s rig count is stable at 190 rigs.
Finally, the Environmental Protection Agency has declared that they propose to make a rule based on a petition filed by Earth Justice and other organizations asking them to change their chemical disclosure policy.
Helms states that North Dakota adopted its chemical disclosure policy, Frac Focus in 2012, and the state is a strong supporter of it. The state feels that changing from Frac Focus is ill advised and is inviting all concerned parties to make comments on the Federal eRulemaking Portal at www.regulations.gov. All comments are due by Aug. 18, 2014, by 5 p.m.
Despite the fact that flaring regulations are being put in place by the state, and the federal government is again talking about putting regulations in place regarding hydraulic fracturing, Helms is confident that North Dakota will remain producing at the one-million-barrel-per-day level.
“We have been seeing a consistent two to three percent increase per month in production,” states Helms. “And the permit and drilling activity indicate that we will continue to see growth well above one million barrels per day.”