Coming out of its coldest April and wettest May ever recorded, North Dakota’s latest oil and natural gas statistics show the amounts of oil transported by rail shot up to 75% in April while new wells connected set a record at 185. Overall, April oil/gas production was down compared to March, but the daily averages set all-time records on a preliminary basis (793,249 b/d and 846 MMcf/d).

Road closures due to the unseasonable weather through most of the spring have held things back, but Department of Mineral Resources Director Lynn Helms said Friday he expects a huge production surge in July and August. There were close to 1,100 idle wells in April, Helms said, and 490 wells were waiting for hydraulic fracturing services.

During a conference call, Justin Kringstad, director of the North Dakota Pipeline Authority, outlined what the state considered two major natural gas developments recently: the proportion of flaring gas going down on unconnected wells and a proposed new west-to-east gas pipeline between the Williston Basin and western Minnesota by MDU Resources’ WBI Energy (see Shale Daily, May 31).

“One of our keys is to have adequate natural gas takeaway out of the region, and this pipeline would connect the Bakken production region with markets in eastern North Dakota and western Minnesota, so this would be a completely new market for Bakken gas,” Kringstad said. “It is gas that is produced but not consumed locally; it is put on one of two major pipeline systems and sold down in the U.S. Midcontinent.”

Kringstad said the WBI proposal would be “a new market opportunity with potential pricing advantages for folks to move their gas easterly as well as providing those regions with a new supply of gas for industrial needs.”

Kringstad said the $650-700 million project is “very exciting” and the largest single project undertaken by MDU Resources, a North Dakota-based utility holding company. It’s a 24-inch diameter line that could move potentially up to 500 MMcf/d.

Regarding the flaring of associated gas at the wellhead, which remained at 29% in April, Kringstad said eliminating flaring totally is probably not attainable, but being “well above 90% [not flared] is certainly realistic. Historically, pre-Bakken flaring percentages in North Dakota were 5% or less, he said.

In terms of daily production, Helms said everyone is pointing toward hitting 800,000 b/d, which he sees coming in July or August, noting that the extreme weather in the spring took its toll on operators because of extensive road closures throughout the state, some of which are still in effect.

“The result is that almost 500 wells are now waiting for hydraulic fracturing,” Helms said. “So the drilling crews are continuing to outpace the frack crews in their ability to get wells on production more quickly. And much of this is the result of bad weather,” which in mid-April had 80% of the state highways shut down.

While the number of wells actually producing in April compared to March was up by more than 100 (8,755 vs. 8,639), overall production month-over-month fell: 24.2 million bbl in March, compared with 23.7 million bbl in April; and 26..2 Bcf in March, compared with 25.8 Bcf in April. Drilling permit activity, too, was down slightly in April (202 new permits vs. 218 in March).

“There have been amazingly steady oil prices [not varying more than a couple of dollars over the past six to nine months] and steady rig counts,” Helms said.

Natural gas prices delivered to the Northern Border Pipeline at Watford City were up 4 cents (3.51/Mcf), resulting in a current oil-to-gas price ratio of 24-to-1, Helms said. “Nevertheless, the high liquids content makes gathering and processing of Bakken gas economic.”