Oil prices have streaked upward in North Dakota’s Bakken Shale as production has hit a winter lull, according to the state’s Department of Mineral Resources (DMR).
DMR Director Lynn Helms in the monthly production report for January, which was issued on Thursday, said oil production was down about 4% month/month (m/m) to 35.5 million bbl (1.14 million b/d) from 36.9 million bbl (1.19 million b/d).
Natural gas production dropped by 1.4% m/m to 88.1 Bcf (2.84 Bcf/d) from 89.5 Bcf (2.88 Bcf/d).
“The Bakken continues to get more gassy as time goes on, and that is something we have anticipated,” said Helms. He also noted there is a growing difference between oil and gas figures.
The state’s rig count jumped up to 15 in February from 12 in January.
The state’s revenue forecast for this year is based on $40/bbl oil prices and 1.2 million b/d of production. Bakken light sweet crude prices were $56.25 on Thursday, compared to $49.13 in February and $41.77 in January.
“The state revenue forecast is built on at least 15 rigs, and 13 drilled but uncompleted wells each month during the year,” Helms said. At current oil prices, there is little danger that the rig count would drop.
Helms also addressed the temporary pause on issuing federal permits to drill by the Biden administration.
“No one knows how long the freeze on leases will last,” he said. A study is planned by the Department of Interior’s Bureau of Land Management. The review is expected to “drag into early summer.”
In the near term, the impact in North Dakota permitting is expected to impact about 150 permits for wells, he said.
“After the next two fiscal years, however, the impact could accelerate rapidly,” said Helms. Still, the pause in permitting appears to be “less of a problem than initially feared.” The permit pause does not apply to tribal trust lands, where the bulk of the state’s production is centered.
“Since that is dominantly the best geology in North Dakota, that really mitigates the impact on our state,” he said. “In addition, in actuality there is no ban on permitting, per se, but a significant slowdown is underway in which no one in local and district offices can issue permits…”
Also on the radar is a court hearing scheduled in April for the Dakota Access Pipeline, Helms said. In January, the U.S. Court of Appeals for the District of Columbia Circuit upheld an earlier court ruling that vacated a key federal permit issued to the controversial oil conduit.
“That is going to be a very significant event in terms of oil production and prices for North Dakota.”
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