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Robust Bakken Production Straining Infrastructure, Gas Capture

North Dakota's latest production statistics show a new record for average daily natural gas production and a near record-breaking daily average for oil, but an unexpected surge in April -- the most recent month for which there are complete statistics -- left state oil and gas officials scratching their heads.

The concern is about the ability of gathering and processing capacity to keep up, as gas takeaway capacity is already exceeded by current production levels and oil takeaway capacity is expected to be eclipsed by production before the end of this year, according to Justin Kringstad, director of the North Dakota Pipeline Authority.

In April, oil production hit 36.7 million bbl (1.22 million b/d), compared to 36 million bbl (1.21 million b/d) in March. Natural gas production hit a record high 67.2 Bcf (2.24 Bcf/d), compared to 65.7 Bcf (2.11 Bcf/d) in March.

The statistics for April, which were released Friday, include a 63,000 b/d increase in oil production, 42% of which took place on the Fort Berthold Native American Reservation. "We were not expecting that kind of a surge until late May or June," said Lynn Helms, director of the Department of Mineral Resources.

Helms offered caution regarding statistics for May, which will be out next month, because barriers were still in place during the month, such as road restrictions and growing infrastructure and workforce shortages. "With the gas processing plant at Robinson Lake being down [in May], we don't know yet what operators have done in terms of shutting in production,” he said.

With the gas plant back in operation, "we expect to break the all-time record this summer," said Helms. With a better than 7% increase in gas production in April, "gas continues to outpace oil, and that creates one of our big challenges,” he said.

In addition to the infrastructure challenges, Helms said there are growing competitive challenges for Bakken operators in terms of workforce, capital and added new plays around the nation, citing the Austin Chalk in Texas and Louisiana.

The statewide gas capture total dipped to 84%, below the statewide standard of 85% as part of North Dakota's industry-backed program for reducing flaring started four years ago. The numbers on Fort Berthold were 78%, and the Bakken overall made it to 85%.

A combination of right-of-way delays for critical gathering pipelines amounting to more than 20 MMcf/d being flared. Then a major compressor outage, contributing an added 23 MMcf/d of flared gas, helped to form the gas capture results on Fort Berthold trust lands being only 76% in April, Helms said. "That is going to be an ongoing struggle, and everyone is very focused on it," he said.

In the meantime, the April statistics were mostly bullish -- with the rig count hitting 60 before climbing to 62 last month, the same level it was at on Friday, according to Helms. Prices for Bakken crude reached $58.12/bbl in May, but were down to $54.75/bbl on Friday. The number of producing wells went up to 14,571 in April, another record for the state.

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