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North Dakota’s August Oil, NatGas Output at All-Time High

Oil and natural gas production continued to climb in North Dakota in August, but at a more modest pace, the state's latest monthly statistics revealed Wednesday.

The Bakken Shale passed the 1 billion bbl milestone, but Department of Mineral Resources Director Lynn Helms said in three counties it would be uneconomic to drill new oil wells at the current prices for Bakken sweet crude ($66.25/bbl). He noted that prices fell steadily from July’s $86.20/bbl through September’s price of $74.50/bbl.

"There are economic wells in parts of Divide County, for example, but the majority of the county is not going to be economic in these current oil prices," said Helms. He said the critical economic factors are low initial production rates for new wells and high volumes of water produced with the oil, both of which vary greatly from county to county.

August oil production totaled 35.1 million bbl (1.13 million b/d), compared to 34.5 million bbl (1.11 million b/d) in July. Natural gas production in August hit 41.5 Bcf (1.34 Bcf/d), compared to 40.1 Bcf (1.29 Bcf/d) in July.

The preliminary totals for oil and gas were new all-time highs.

However, low oil prices could eventually put eight to 10 rigs out of service, according to Helms, who reported the latest rig count at 190 statewide, down from a September count of 195 and 193 in August.

"Rig count in the Williston Basin is no longer increasing," Helms said. "The utilization rate for rigs capable of 20,000-plus foot depths remains above 90%, while shallower rigs [7,000 feet or less] are about 60%."

Natural gas prices were up slightly in August, averaging $3.45/Mcf at Northern Border Pipeline in Watford City, marking a 3-cent increase.

The associated wellhead gas flaring percentage in August increased slightly to 27%, but there was a wide difference between amounts of gas captured off of the federal lands at Fort Berthold Reservation and the much smaller volumes captured on the reservation. Under the state's gas capture rules, operators must capture at least 74% of associated gas production as of Oct. 1 (see Shale Daily, June 2).

In August, operators off of Fort Berthold captured 74.4%, but on the reservation the capture percentage was only 64.5%.

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