Oil and natural gas production in North Dakota's portion of the Bakken Shale hit new production records in October, but the state's chief oil and gas regulator predicted a decrease this winter.
At the same time, prices for Bakken light sweet crude have dropped by nearly half since October, the most recent month with figures available. The price hit $26.25/bbl Friday, compared to $58.43/bbl in October this year.
Lynn Helms, director of the state’s Department of Mineral Resources Lynn, said the market is giving "mixed signals" when it comes to prices, which have plummeted relative to West Texas Intermediate (WTI) prices.
"We're really getting mixed signals from the market, the EIA [U.S. Energy Information Administration] and all of the analysts, so you can see a huge spread between North Dakota crude and WTI," Helms said. The average of the North Dakota and WTI prices at any given time will provide an estimate of what producers in the state are getting, within plus/minus $1/bbl, he said.
"Our best estimate today is that a Bakken producer is getting in the range of $40/bbl," he said.
Helms said industry operators have indicated that they intend to slow their investments in the Bakken through 1Q2019. "My guess is that we see plateauing, or much slower growth in production, from now until April or May," Helms said. "It is anticipated that investment in drilling, hydraulic fracturing, and well completions is going to slow, and investment in gas gathering and pipelines will run just as high as absolutely possible."
Oil production reported for October was 43.1 million bbl (1.39 million b/d), compared to 40.7 million bbl (1.35 million b/d) in September. Natural gas production in October was 79.4 Bcf (2.56 Bcf/d), compared to 75.8 Bcf (2.52 Bcf/d) in September.
Producing wells totaled 15,344 in October, compared with 15,287 during the previous month. As of last Friday, the rig count was 67, compared to 64 in November.
Gas capture efforts have stagnated somewhat, hitting 80% statewide and near 70% on the Fort Berthold Reservation, from which about a third of Bakken production is derived. The statewide goal in effect until 2020 is 88%.
Helms noted some optimism on the flaring issue due to current higher prices for both natural gas and natural gas liquids. "There is going to be more of a market incentive to perform gas capture," Helms said.