After a record-setting 2011, North Dakota continues to set all-time highs in oil and natural gas production, producing wells and rig counts, according to the latest statistics from the state's Department of Mineral Resources (DMR).

"The idle well count is falling with just under 250 wells now waiting on hydraulic fracturing [fracking] services," said DMR Director Lynn Helms in the latest monthly report. "More crews are moving to North Dakota to catch up." Warm, dry weather has continued to increase fracking activity in the state, he said.

Natural gas production continues to climb, although prices continue to fall, hitting $1.89/Mcf delivered to Northern Border Pipeline at Watford City. This results in a current oil-to-gas price ratio of 40:1, he said.

"Daily gas production is up, while construction of processing plants and gathering systems was slowed in February due to colder weather. U.S. gas storage is 52% above the five-year average, which means low prices for the foreseeable future." Helms said the low gas prices do not justify investment in gathering and processing infrastructure, but natural gas liquids make gathering and processing of Bakken Shale gas economic.

"Additions to processing capacity in the state are beginning to be reflected in a declining percentage of gas being flared and this trend should continue in the coming months," Helms said.

The state's rig count has been steadily rising in the midst of mild winter weather, hitting an all-time high of 207 on March 3-4, before dropping back to its current 205 total. At the end of 2011 the rig count was 199, according to statistics.

According to NGI's Shale Daily Unconventional Rig Count for the week ending March 16, the Bakken/Sanish/Three Forks area, which includes portions of North Dakota and Montana in the United States, as well as Saskatchewan and Manitoba in Canada, has been the second fastest growing unconventional play in the United States over the last year, second only to the Eagle Ford Shale. For the week, a total of 214 rigs were actively searching for oil and gas in the play, up 27% from the 169 rigs operating one year ago and up nine rigs from a month ago.

Preliminary oil production data indicated that 16.9 million bbl was produced in January, while natural gas output topped out at 17.7 Bcf, or about 571 MMcf/d, for the month, both all-time monthly records. Nearly 95% of state output was from the Bakken Shale. Permitting, however, dropped to 170 issued in January after an all-time high of 245 in November 2010. In December 180 drilling permits were issued.

"Adding rigs now requires new builds [because] in the Rocky Mountain area use of rigs capable of more than 20,000-foot depths is more than 95%," Helms said. "Many of the new rigs are replacing older, less efficient ones. For shallow rigs that drill to 7,000 feet or less the utilization remains about 50%."