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Bakken Shale Natural Gas Prices ‘In the Tank’ as Production Rebounds From Winter Storm Shut-ins
Bakken Shale natural gas prices remain at pandemic-era lows amid an overall softening of the North American market, according to North Dakota’s Department of Mineral Resources (DMR).
The price of natural gas delivered to TC Energy Corp. and Oneok Inc.’s Northern Border pipeline system at Watford City, ND, stood at $2.08/Mcf as of Wednesday (March 15).
“Natural gas prices are really in the tank,” DMR’s Lynn Helms, Oil and Gas Division director, said during a press briefing.
He cited that U.S. natural gas storage inventories currently sit comfortably above the five-year average for this time of year, a bearish indicator.
Due to regulatory and investor pressure to stamp out routine gas flaring, low prices put “a lot of stress on the system,” Helms said. “It’s very difficult to make progress on gas capture.”
North Dakota producers nonetheless managed to capture and market 95% of gas production during January, meaning just 5% was flared, vented or leaked.
“We’re working on some proposals within the legislature to try to incentivize increased gas capture,” Helms said.
Low prices notwithstanding, production showed a strong recovery in January versus December, due to milder weather.
North Dakota’s natural gas production averaged 2.8 Bcf/d in January, up 7.23% from December, according to DMR.
Helms said DMR expects “another major increase” in February production, although March could be “a bit of a struggle” due to weather impacts this month.
Helms was joined by the North Dakota Pipeline Authority’s Justin Kringstad, director. He cited recent comments from Oneok management that the firm saw increased volumes on Northern Border during the fourth quarter.
Oneok COO Kevin Burdick said there is still potential for Bakken volumes to displace about 300-400 MMcf/d of Canadian volumes on the system. Burdick also said that projects are advancing to expand gas egress capacity from the Bakken into the Cheyenne natural gas hub, which straddles the Powder River and Denver-Julesburg basins.
The Rockies region has become a pivotal swing supplier of gas to the West Coast and Southwest United States.
North Dakota’s oil production, meanwhile, rose 11% month/month in January to 1.06 million b/d.
The number of wells permitted in February totaled 70, down from 79 in January and 94 in December, DMR data show.
The state’s drilling rig count was holding steady at 45 as of Wednesday (March 15), following monthly averages of 44, 46 and 46 in December, January and February, respectively.
“The drilling rig count has stalled in the mid-forties, with a gradual increase expected over the next two years,” Helms said.
North Dakota’s drilled but uncompleted well count stood at 469 as of January, up from 450 in December.
Well completions totaled 96 in February, according to preliminary estimates. This compares to 67 in January and 104 in December.
There were 18 active completion crews as of Wednesday, Helms said.
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