After a short-lived lull in late fall, North Dakota's oil and natural gas production set new records at the end of last year, and the issuance of new drilling permits in January surged, the state's Department of Mineral Resources (DMR) reported Friday.
There was also a drop in the percentage of gas being flared to below 30%, which DMR Director Lynn Helms attributed to new gathering and processing infrastructure coming online in December. The data is still preliminary, but it reflects a continuation of the many milestones reported throughout 2012 (see Shale Daily, Jan. 12, 2012).
About the only thing that could slow the relentless growth, 95% of which is centered in the Bakken/Three Forks formations, is future federal policies regarding hydraulic fracturing (fracking), taxation, and environmental rules for emissions and water, Helms said.
"Operators were continuing to transition to higher efficiency rigs and implementing cost-cutting measures at the end of their 2012 budgets," said Helms, adding the caveat that "they are still cautious about the uncertainty surrounding future federal policies on taxation and fracking."
Oil production in December totaled 23.8 million bbl (768,853 b/d), an all-time high topping November's 22 million bbl and 735,062 b/d totals, respectively. For gas it was more of the same: 24.9 Bcf (805 MMcf/d) in December, up from 23.5 Bcf (783 MMcf/d) the previous month.
Associated gas production increases continued as the price slipped in December to $2.83/Mcf into the Northern Border Pipeline at Watford City, and U.S. gas storage stood at 16% above the five-year average. The percentage of flared gas dropped to 29% with new gathering and processing in place.
The records were achieved despite a continuing decline in drilling in December, and well completions were slightly lower than the previous 12-month average, Helms said. "Better weather and completion of 123 new wells brought production back on track," he said.
Helms said there were about 413 wells waiting on completion services at the end of last year. "We can now estimate from well completion rates and production responses in November and December that it takes about 90 new wells per month to maintain production."
After dropping to 154 in December, drilling permits issued jumped back to 218 in January, Helms said. The rig count has stayed between 182 and 186 for November through January. The current rig count is 182, he said.
"Drilling permit activity was up significantly in January, and we continue to have a sufficient permit inventory to accommodate more multi-well pads, along with accommodating the desire to use already built locations during winter and provide the time required to publish fracking rules if required."