In a reversal not seen for a number of months, North Dakota oil/natural gas officials on Friday reported a decline in month-over-month production for both oil and gas in January, and some of the sour weather conditions attributed to the drop may keep production down well into May, according to Lynn Helms, director of the state Department of Mineral Resources (DMR).
While Helm’s monthly report cited a number of positive longer-term trends related to production, flaring and takeaway infrastructure in the state, he called the January reversal significant. Preliminary oil production was 22.8 million bbl (738,022 b/d) in January, compared with 23.8 million bbl (770,111 b/d) in December last year.
For oil it amounts to a 4.2% month-over-month decline, coming after months of continuous monthly production gains.
Natural gas followed the same pattern, hitting a preliminary total 24.5 Bcf (793 MMcf/d) in January, compared with 25.3 Bcf (818 MMcf/d) in December. The declines came even though an all-time high was reached in producing wells in December at 8,322 wells, drilling permits issued shot up to 218 in January from 154 the previous month, and rig count stayed basically flat, hitting 188 as of Friday, according to Helms. It was 185 in January.
“This was a very significant drop in production that we’re attributing to weather — first the Gandolph snowstorm followed by over a week of sub-zero temperatures and wind chills,” said Helms, noting the sub-freezing temperatures “really hamper” hydraulic fracturing operations with most companies operating in high-efficiency modes.
As a result, there were 410 wells awaiting hydraulic fracturing in January, Helms said.
“Drilling permit activity was up significantly in January but fell again in February,” he said. “We have sufficient permit inventory to accommodate more multi-well pads; however, there is the difficultly of constructing locations during winter and the time to publish hydraulic fracturing rules if required.”
Helms said under current weather patterns, which have already turned up two major snowstorms in March so far, February “could be a good month,” but there are more storms on the way in March. Following the upcoming bad weather, some counties are planning to impose “very strict” load restrictions, so he sees the declining production trends spreading all the way into May.
“This pattern could extend well into May until we break out of it. We don’t think the overall [state] revenue forecast is in any danger. It is built around 830,000 b/d production starting in July and drilling 850,000 b/d eventually.”
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