North Dakota oil and natural gas production shot up in August along with gas capture volumes, but the production surge is expected to fall back and continue declining by the end of the year.
Oil production in August topped 36 million bbl (1.16 million b/d), compared with 32.3 million bbl (1.04 million b/d) in July. Gas production climbed to 81.5 Bcf (2.62 Bcf/d), compared with 71.3 Bcf (2.30 Bcf/d) in July.
Globally, the pandemic and its widespread destruction of energy demand continue to affect oil patch operations, erasing the significance of rig counts and elevating the importance of well completion statistics, according to Department of Mineral Resources director Lynn Helms. He discussed the outlook during a webinar last Friday as oil prices in the state averaged $31.75/bbl.
“The prices we have are not supportive of well completions, which we really need to drive this thing,” he said. “They are supportive of return-to-production, but now we have less than 100,000 b/d shut in, so we have just about tapped out the return to production increases we are going to see. We don’t have the drill-and-completion numbers that will drive production higher.”
All segments of the Bakken Shale in North Dakota are expected to meet the Nov. 1 deadline for reaching or exceeding the state-mandated gas capture goal of 91%. In August, the overall mark was 92%.
“These were great numbers on gas capture,” he said, “solid across-the-board with even the Fort Berthold Indian Reservation exceeding the statewide goal” to reach 80%, Helms said. “There is no place in North Dakota that isn’t capturing at least 91%.”
Pipeline Authority director Justin Kringstad said the steady downturn in the number of well completions freed up oilfield workers to complete more gathering pipeline infrastructure. From May through August, shut-in wells declined by about two-thirds from a peak of 6,700 to 2,700.
After 96 completions collectively in June and July, preliminary tabulations found only 19 in August. Wells waiting for completion stayed flat — 878 in July and 846 in August.
“For the last few months, the midstream industry has been connecting more new wells to gas gathering and processing facilities than the number of new producing wells, so they have been able to catch up on wells that have previously not been connected,” Kringstad said. “That is why we have seen the amount of gas flaring shrink from unconnected facilities.”
Citing other national statistics, Kringstad said North Dakota should be in a good position in the next year in terms of having adequate gas processing in the region. Longer term, if gas production shoots upward, more infrastructure will need to be built.
Helms also reported that a major industry-state effort, Bakken Restart, to deal with idle and abandoned wells and provide jobs for idle oilfield workers was slow getting started and thus, the multimillion-dollar effort using federal CARES Act (coronavirus relief) funds will have $16.9 million of unspent funds when the program has to stop with the onset of winter in December.
North Dakota is trying to get the federal Covid-19 relief funds re-purposed to fund up to five new hydraulic fracturing crews next year to create more jobs in this down time and help boost Bakken production. “Unless that happens, starting in November we’ll see production start to drop,” Helms said.
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