Posted 2/18/14 (Tue)
By Stephanie Norman
Farmer Staff Writer
Oil and gas production has experienced a plunge in production for the first time since January of 2012, according to the North Dakota Industrial Commission Department of Mineral Resources.
According to Lynn Helms, Department of Mineral Resources director, the drop in oil and natural gas production is directly weather-related.
“Drilling was impacted by the cold weather in December,” Helms said. “There were a lot of days that temperatures were 21 to 31 degrees below zero. When you’re working in North Dakota in negative 10 and 20-degree temperatures, mechanical things tend to not work so well.”
Oil production during December was down 5.5 percent, which is equivalent to 53,000 barrels per day, Helms explained. In November of 2013, the industry produced 976,453 barrels of oil per day, which was an all-time high. Within one month, the production plummeted.
“Although production is down, oil prices are up,” Helms said. “Oil prices are up $7 from January and we are back above $80 per barrel.”
Gas production is even more in the slumps. The state’s production of natural gas fell by 93,926 million cubic feet per day from November to December of 2013. The all-time high for gas production in a day is 1,085, 256 MCF.
“Having crews work in the cold weather is difficult,” Justin Kringstad, director of the North Dakota Pipeline Authority, said. “It’s hard to get pipe in the ground when it’s freezing.”
Although weather may have slowed down oil and gas production, investors still see the potential to build, produce and make money.
“Investor confidence appears to be growing,” Helms said. “But there is still some concerns about the uncertainty surrounding federal policies on taxation and hydraulic fracturing.”
The United States Environmental Protection Agency released new guidelines on Feb. 13, regarding hydraulic fracturing.
“Nearly two years of comment and analysis resulted in some very real improvements,” Helms said. “But more significantly allowed the industry time to develop new recipes that do not use diesel fuel. We are a bit disappointed that the EPA did not provide for the ability to use a minimal amount of diesel, such as less than one percent. However, they reduced the impact a great deal by removing petroleum distillate, synonyms, and substantially similar compounds.”
Diesel fuel is the most odorous material used when fracking, according to Helms, and the EPA has eliminated it.
After reviewing the FracFocus data for North Dakota wells, the Department of Mineral Resources found 15 different instances in which kerosene was used at concentrations less than four ten-thousands of one percent for fracking. Kerosene is considered a diesel fuel, according to EPA.
“The operator of those sites has been contacted, the reasons for kerosene use have been identified, and the operator has already eliminated that product from its treatments,” Helms said. “We were given less than 24 hours advance notice of this change. We are working hard and fast to get information out about getting permits if you’re going to use one of the five chemicals listed when fracking.”
Overall, the North Dakota drilling rig count is up, but production is down.
McKenzie County continues to lead the state with the most active rigs, according to Helms.
McKenzie County produced 8,804,669 barrels of oil and 13,108,257 MCF of natural gas in November, coming from 2,204 wells.
In December, McKenzie County had 2,201 wells actually producing, but an additional 344 that were capable of producing. All together, the county was responsible for 8,577,770 barrels of oil in December and 12,556,928 MCF of natural gas.
During November, there was 184 rigs drilling in North Dakota, with that number increasing to 190 in December.
In January of 2014, there were 188 rigs in the state.