Bakken Shale oil production in North Dakota rebounded in July, topping 1 million b/d, but the state expects output to drop again without higher crude prices and more rigs in operation.

Chief oil and gas regulator Lynn Helms during a webinar Tuesday said oil and gas production jumped overall in July month/month by 16.5%.

Oil output grew in July to 32.2 million bbl (1.04 million b/d), compared to June’s 26.8 million bbl (893,591 b/d). Natural gas production climbed to 71.2 Bcf (2.29 Bcf/d) from 59.1 Bcf (1.97 Bcf/d).

Gas capture hit an all-time high of 91%, a 19% increase. The rate meets a statewide mandated percentage that takes effect in November.

More than 1,000 unconventional wells also were brought back online between June and July, along with 200 vertical wells, Helms said.

Helms, director of the Department of Mineral Resources, said “crude prices are very soft and there is a tremendous amount of oil in storage, raising concerns about how long the production rebound will last.” 

Bakken light sweet crude was $29.25/bbl on Tuesday, compared to June-August prices in the low $30/bbl range.

“Prices continue to be soft, and they are going to be soft this winter unless something extraordinary happens,” Helms said. “We’re approaching the winter season with only 10 rigs, a modern day low for us when we need 35-40 rigs if we want to sustain 1.25 million b/d.”

The state expects production to decline before winter given the decline in drilling and hydraulic fracturing (fracking).

“Without 16-35 drilling rigs and 20 frack crews operating, we will not sustain those sorts of production numbers in the winter,” he said. “We’re not even close to the kind of completion numbers we need to sustain 1.2-1.3 million b/d.”

Low oil prices “make it difficult to put wells back on production. To return wells to production you need $35-40/bbl oil, frack crews need $45-50 and drilling rigs need $55-60.”

There is a complex set of external factors that have put Bakken crude under a cloud of uncertainty, including a storage overhang nationally and the potential impacts from hurricane season in the Gulf of Mexico. There also is uncertainty about the Dakota Access Pipeline, which moves Bakken crude to markets.