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Oil production leveling off

Posted 4/26/16 (Tue)

By Neal A. Shipman
Farmer Editor

After several months of decline, North Dakota’s oil production has started to level off, according to Lynn Helms, director of the North Dakota Department of Mineral Resources.
“We felt that the state would continue to see oil production continue to follow the pattern of a 20,000 to 30,000 barrel per day decline that we saw in the previous months,” stated Helms, during his monthly Director’s Cut. “But it only dropped less than half a percent.”
Preliminary February oil production, according to Helms, was 1,118,333 barrels per day, a slight decline from the final January tally of 1,122,462 barrels. However, the state’s gas production set a new all-time high of 1,690,632 MCF a day,  a three percent increase over January’s level.
“The change in gas and oil production reflects a continued tighter and tighter focus on the core area of the Bakken,” stated Helms. “Plus we are seeing the need for cash by some of the operators.”
The evidence of the oil industry’s focus moving to the core areas of the state was apparent to Helms, who recently toured western North Dakota.
“There is no drilling activity outside the core area,” stated Helms. “But around the Johnson Corners area, there were frac crews, flowback crews, workover rigs and new pads being constructed,” stated Helms. “There was quite a bit of activity there, but it was in a relatively small area.”
McKenzie County’s oil and gas production numbers, as well as the number of drilling rigs active in the county, reflects Helms’ opinion that oil companies are continuing to concentrate on the core of the Bakken.
In February McKenzie County produced nearly 37 percent of the state’s oil and 47 percent of the state’s natural gas. The county produced 11,993,331 of the state’s 32,431,669 barrels of oil and 22,923,081 MCF  of the state’s 49,028,332 MCF of natural gas.
According to Helms, the continued low price of oil is forcing some companies to put more wells into inactive status.
“The state has seen 700 wells go inactive since December,” stated Helms. “But the bulk of those wells have been conventional wells that don’t support repairs and production at today’s oil prices.”
Of the state’s 31 active rigs, 18 are operating in McKenzie County, and the county has 3,900 of the state’s 14,862 producing wells.
While Helms states that oil pricing is improving, it is still going to be a difficult second quarter for the industry.
“The great news is we are now at 89 percent in gas capture,” stated Helms. “But if prices begin to recover and more wells are completed at a rapid pace in the months ahead, the flaring percentage may reverse slightly.”
According to Helms, the state’s rig count stood at 29 on April 15.