Oil and natural gas operators in North Dakota's Bakken Shale play applied the brakes to production in June, the state’s director of the Department of Mineral Resources said Thursday.
Lynn Helms attributed the monthly decreases to natural gas capture challenges, weather and a continuing shortage of hydraulic fracturing (fracking) crews.
"The industry hasn't taken its foot off the accelerator, but it was definitely tapping the brakes in June with a 21,000 b/d decrease, about 2%," Helms said during a monthly webinar. However, the state set a new record for producing wells in June, reaching 14,778, despite dropping eight rigs.
"There are a record number of wells producing, but the operators are restricting the production from some of them,” he said.
In June, overall oil production was 36.7 million bbl (1.22 million b/d), compared to May output of 38.6 million bbl (1.24 million b/d). For natural gas, June output fell to 69 Bcf (2.3 Bcf/d) from May’s total of 71.7 Bcf (2.31 Bcf/d).
Both prices and the state’s rig count have dropped since peaking for the year in July, with North Dakota sweet crude hitting $63.13/bbl last month then dropping to $55/bbl on Thursday. The rig count climbed to 66 in July, but Helms said it was at 58 as of Thursday.
"Again gas capture is ruling the day in the rig count drop," he said. "Industry at 66 rigs was outrunning gas capture capacity, and they were outrunning or stretching the fracking crews, which is a third element in the production drop."
North Dakota currently has 40 fracking crews operating, and operators are trying to hire more people.
"With 40 crews and 66 rigs operating, they are just barely keeping up," Helms said. "So it is gas capture, weather and frack crews that are causing industry to tap the brakes.." Weather events at times close roads.
For the second month in a row in June, operators missed the state’s 85% gas capture goal with the Bakken reaching 84%. There are concerns by state officials that when the goal is raised to 88% in November a number of operators will not be in compliance and could have their production restricted.
The gas flaring is centered on trust lands on the Fort Berthold Reservation. Efforts are underway to alleviate the issue, "but we probably won't see the benefits of that until next year,” Helms said. In addition, the current shortage of excess capacity in gathering and processing systems is likely to continue through the end of 2019.
"We're not going to have any breathing room; we're going to be running at or above what the gas gathering can process, so we're going to be continuing to talk about this."
Despite the looming challenges to production, the state should surpass the record volumes for oil and gas set in May, he said.
"I really expect some more production records to be set before the end of the year...We expect to see some tentative breathing room on gas processing capacity by the end of this year, so the last quarter of this year and the first quarter next year we should have some added processing.”