North Dakota’s Bakken Shale could experience up to 400,000 b/d of shut-ins for an interim period if a federal court hearing set for Monday results in the forced closure of the Dakota Access Pipeline (DAPL), the state’s chief oil and gas regulator said Thursday.
Lynn Helms, director of the state’s Department of Mineral Resources, made the remarks while reporting production decreases amid $50 local oil prices. Monthly production in the state took a bigger-than-expected tumble in February mostly due to severe cold weather and a regional Midwest power outage that caused rolling blackouts to be deployed in the heart of the Bakken Shale area, Helms said.
While the drop is disconcerting to state officials and their fossil fuel-dependent budgetary revenue projections, the fact that average prices for Bakken sweet crude have continued to climb steadily this year is a harbinger for improved output in coming months. However, the uncertainty surrounding the fate of the Energy Transfer LP-operated DAPL has Helms’ undivided attention.
“I found the tone of the judge [James Boasberg] a little bit concerning,” Helms said about a key April 9 hearing in federal court. “Energy Transfer, the state of North Dakota, and the MHA Tribe are all looking for ways to change the dynamic, so Energy Transfer requested Monday’s en banc hearing.
“All three of those parties are concerned about the tone of the earlier hearing, but there is not a lot of time here. They’re all looking to raise the bar, step up the game and increase the dynamic of where that hearing is headed.”
Helms said the state anticipates that there would have to be some temporary shut-ins from a DAPL closing because the pipeline has such a large proportion of firm transport customers. All of these firm customers would need time to get a force majeure designation and arrange alternate transportation, he said.
“At least for a short period of time, we could see 400,000 b/d shut-in,” said Helms, noting separately that the state is concerned about maintaining more than 1 million b/d of oil production. The key is maintaining up to 10 hydraulic fracturing (fracking) crews, and currently there are eight operating, he said.
Helms made his comments during a webinar Thursday to release the most recent monthly statistics, emphasizing that state accountants had expected a 2-3% drop in oil and gas production, but instead saw 6% and 5% decreases from oil and gas, respectively. The oil decrease caused an 8.5% drop in state revenues for February, Helms said.
Oil production for the month was 30.3 million bbls (1.08 million b/d), compared to 35.5 million bbls (1.14 million b/d) in January. For the same two months, gas production was 75.7 Bcf (2.7 Bcf/d) in February and 88.3 Bcf (2.84 Bcf/d) the previous month.
Based on the severe weather and sustained power grid problems, the three biggest producing counties collectively lost an average oil production of 17,000 b/d, and gas gathering and processing capacity was down about 20% during a two- to three-week period, Helms said.
“Without the prolonged outages we would have been right on the 1.1-million-b/d number, and the numbers on oil prices are good news,” said Helms, reporting Thursday’s price at $56.75/bbl, or 20% above revenue forecasts. February’s average price of $49.17/bbl was 4% above forecast estimates.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 2158-8023 |