North Dakota’s chief oil and natural gas official said Tuesday the industry mindset has turned to “weathering the storm” of sustained low commodity prices. Part of the weathering will come soon from the state Industrial Commission (IC) in an upcoming policy shift to allow more time for uncompleted wells.

“When faced with a storm, sailors pull the sails down to a much-smaller-than-normal size to manage the boat better and make sure it doesn’t capsize,” said Lynn Helms, director of the Department of Mineral Resources (DMR). “And that is what seems like our [oil/gas] operators in North Dakota are doing…trying to weather the storm.”

In releasing the state’s latest production statistics, he said oil production was down “significantly” (20,000 b/d) and for the first time in 12 years August production was lower than levels in July.

“It is definitely not normal since August has almost always been an up-month throughout the Bakken history. August is normally up by 20,000 b/d, so this is a reflection of what is really happening in the industry in this prolonged low-price environment,” he said.

August oil production dropped to 36.7 million bbl (1.18 million b/d), compared to 37.4 million bbl (1.2 million b/d) in July. Natural gas production in August was 50.9 Bcf (1.64 Bcf/d), compared with 51.4 Bcf (1.66 Bcf/d) in July.

The rig count dropped to 71 in September and has continued to drop, hitting 67 on Tuesday, said Helms. He said the count could go down as low as 60 and noted that currently no operators have 10 or more rigs; most have eight rigs.

In the midst of all the decreasing numbers, producing wells in August actually hit an all-time high for the Bakken at 13,016 versus 12,965 in July. Four of the five producing wells are unconventional Bakken/Three Forks wells. Helms noted that West Texas Intermediate crude prices on Tuesday were $38/bbl, while sweet crude oil was at $35/bbl, with the North Dakota wellhead price is at $41/bbl.

There were 115 wells completed in August, Helms said, but drilled but uncompleted (DUC) well numbers are swelling (993), and there eventually could be more than 1,000 in the backlog. Fully half of these DUCs are facing their one-year deadlines for completion between December and March.

Helms said he would be meeting with the three-member IC to extend the deadlines and allow more “temporary abandonment” status for wells. Each DUC would have to be considered on a case-by-case basis. The IC is meeting Oct. 22 to consider the policy for temporary abandonment for wells that are running into the “limited on uncompleted well status.”

Flaring statistics remained stable with only a “slight uptick,” he said. The statewide gas capture in August was 80%, with voluntary curtailments that total about 10,000 b/d keeping flaring numbers in that range.

Most hedges put in place by operators are expiring in the third quarter, but many have re-hedged supplies, said Helms. Instead of previous hedges of about $90/bbl, hedges now are for $50/bbl or $60/bbl. “That reflects an attitude for leaving the oil in the ground and not producing it, voluntarily reducing production and rig counts and leaving wells uncompleted in this low price environment.”