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State’s oil production takes big hit

Posted 6/21/16 (Tue)

State’s oil production takes big hit

Jack Dura
Farmer Staff Writer

North Dakota’s top oil and gas regulator related last month’s oil production in terms of the good, the bad and the ugly.
Lynn Helms, director of the Department of Mineral Resources, said small increases in prices, active drilling rigs and capturing natural gas are positives while a projected daily barrel production drop and a zero rig count in Williams County are not good.
“We’re up one rig from May to today,” Helms said. “At least it indicates we’re at the bottom and with prices increasing and a one-rig increase, that’s some good news.”
Sustaining North Dakota light sweet crude above $50 a barrel lasted less than a week, Helms added, bad news for keeping such prices on a 90-day target.
“That’s the price before people work very well seriously on the non-completed well count,” Helms said. “We’re not going to see serious erosion of that 900 non-completed wells until we stay above $50 for 90 days. The market wouldn’t support it at this point.”
The state also saw 1,590 inactive wells from May to June, Helms said, adding he expects that number to pass 1,600.
Meanwhile, the state may file a petition for review before Aug. 2 in response to the EPA’s new rules on methane reduction and the agency’s information request on methane emission reduction on existing sources.
“The initial rule was for new and modified sources,” Helms said. “The information request will go out, I heard, in excess of 20,000 of those to the industry, and that will be looking at existing sources.”
Across the Bakken, Williams County hit a new low Wednesday, June 15, when its rig count fell to zero.
“That’s a very significant thing to have 100 percent of the rigs exit the county,” Helms said.
Williams County hasn’t held zero rigs since October 2008, he added.
Ugliest of all, Helms said, the state saw its largest daily production drop between March and April, with a deficit of 70,400 daily barrels.
“That is the largest production drop we have ever had in the state of North Dakota,” Helms said. “I don’t think you can really ignore the significance of that factor.”
The previous drop record was a 50,000 daily barrel deficit from November to December 2013, largely due to wind and temperatures in the minus 40s.
Three factors affect the drop in daily production, Helms said, including low activity, road restrictions in April and too many windy days the same month to fracture wells.
“Roughly half of the calendar days of the month, the wind was 36 miles an hour or higher, sustained winds and no capability to frack wells,” Helms said. “This is an abnormally high production drop.”
McKenzie County, meanwhile, “looks very solid,” Helms said, as does Dunn County, two counties where 21 of the state’s 27 active rigs stood as of Wednesday, June 15.
McKenzie saw a tiny increase in wells from March to April, growing four wells to 3,447, the state reported.
The county also produced 13.2 million barrels of oil in March, contributing over a third of the state’s total for the month.
In April, the county hauled in 11.6 million barrels, while the state collected 31.2 million total.
Helms said McKenzie County, in addition to northwestern Dunn County, “look very solid,” with low impacts from the dropping rig count.
“That part of the state is still doing okay,” Helms added.