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North Dakota Output Still Breaking Records

North Dakota continues to set new records for oil and natural gas production, and it has begun working on innovative solutions to deal with the abundance of flared gas.

In the state's most recent data as of the end of September, all-time records were again reached in natural gas and crude oil production, producing wells and permits issued. Oil produced hit 21.8 million bbl, compared to 21.7 million bbl in August, while gas reached 23.8 Bcf in September, compared to 23.6 Bcf the previous month. The daily totals in September were 728,494 b/d and 793 MMcf/d, respectively, both all-time highs.

The number of producing wells during the month averaged 7,798, compared to 7,701 in August, and permits issued rose dramatically from 261 in August to 370 in October, another all-time high, while rig counts kept trending down from 198 in August to 188 in October. Prices for crude moved upward during the three month period, averaging $80.65/bbl in August, $84.98/bbl in September and $87/bbl in October. The average price for natural gas exceeded $3/Mcf.

"The weather was great for drilling and hydraulic fracturing resulting in a 4% oil production rate increase from August to September," said Lynn Helms, who directs North Dakota's Department of Mineral Resources (DMR). "Rig count has stabilized at around 190 as operators transition to higher efficiency rigs and implement cost cutting measures. The idle well count remained constant indicating an estimated 300 wells waiting on fracturing services."

Helms reiterated past months' reports that there continues to be rapidly escalating well costs that "consumed capital spending budgets faster than many companies anticipated and uncertainty surrounding future federal policies on hydraulic fracturing are impacting capital investment decisions."

Additions to gathering and processing capacity are helping with gas production, but the "percentage of gas flared rose slightly to 30%" in September. The North Dakota's Oil and Gas Research Council has provided a $1 million grant to New York-based firm NFlex to pursue the first of what eventually could be up to three anhydrous ammonia fertilizer plants.

NFlex has developed a scaled-down technology to apply single-well-sized equipment to make fertilizer near the wellhead, Helms said. "Farmers around the state report the anhydrous ammonia prices are at record highs, and they are welcoming this with open arms as we and the oil/gas industry try to reduce the flaring numbers."

Flaring is a balancing act, he said. "It is still very much a struggle to bring down the flaring percentage," said Helms, noting that drilling restrictions might bring down the flaring faster but reduce Bakken oil profits by up to 25%. "Flaring is going to be a hard problem to solve. Eventually we need to bring more technology to bear [such as the fertilizer projects]."

North Dakota Pipeline Authority chief Justin Kringstad said North Dakota is connecting wells to gas gathering systems at a record pace, but the number of wells where flaring is occurring continues to ramp up, currently standing at about 1,200 even with more than 5,000 having connections to gas gathering systems. With other longer term options involving power generation, compressed natural gas and liquefied natural gas for transportation and fertilizer production taking more time to develop, he said it was important to "continue to focus on expanding the gathering systems as quickly as possible."

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