North Dakota oil and natural gas production maintained its record pace through the end of May, according to the latest statistics from state Department of Mineral Resources Director Lynn Helms. Oil and gas production both hit all-time highs again in May.

Helms noted that if the robust gas production keeps up, more gathering and processing capacity will be needed in the state. In the meantime, continued low gas prices are expected, he said.

Helms' preliminary data showed 19.8 million barrels of oil, or 639,277 bbl/d, compared with 18.2 million bbl, or 609,503 b/d in April. Gas production hit 21.2 Bcf, or 687 MMcf/d, in May, compared with 19.5 Bcf, or 650 MMcf/d, in April.

Production levels continued to soar despite the fact that the rig count has stayed fairly constant (211 in May, 213 in June and 208 currently) and permitting of new wells has slowed compared to an all-time high two years ago. New permits totaled 180, along with one seismic permit in May, compared to 167 permits and two seismic permits in April.

Noting that more than 95% of the drilling targets the Bakken and Three Forks formations, Helms said mild weather in May resulted in increased hydraulic fracturing (fracking) activity. "The idle well count stayed almost the same, leaving an estimated 336 wells waiting on fracking services," he said.

In a continuing trend, Helms reported that crude oil takeaway via pipeline is almost 35% below production levels, but rail and truck transportation are adequate to keep up with the near-term production projections.

In the warmer weather, processing plant and gathering system construction is accelerating, Helms said. "Daily natural gas production is increasing slightly faster than oil production, and this indicates that gas/oil ratios may be increasing," he said.

With gas storage dropping nationally to 20% above the five-year average level, Helms said all the indicators are for "low prices for the foreseeable future," and North Dakota's shallow gas exploration continued to be uneconomic at near-term prices. Gas delivered to Northern Border Pipeline at Watford City went down to $2.05/Mcf, resulting in an oil-to-gas price ratio of 35 to 1, according to Helms' calculations.

Helms emphasized that the Bakken's high liquids content makes gathering and processing of its gas economic, and additions to processing capacity are starting to lower the percentages of gas flared, which now sits at 31.5%, compared to an historic high of 36% reached last September.

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