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North Dakota oil production falls 9,846 B/D in March: state agency

http://www.chemnet.com   May 16,2016 Platts
North Dakota's crude oil production fell less than 1% or 9,846 b/d in March from the previous month, the state's department of mineral resources said Thursday, a smaller decline than officials had expected.

The state produced 1.109 million b/d in March, compared with 1.119 million b/d in February, the agency said. The state notched peak production of 1.227 million b/d in December 2014.

There is a two-month lag in reporting output numbers.

"We were anticipating more than double [the actual decline]," Lynn Helms, director of North Dakota's Oil and Gas Division, said in his monthly press conference which was also available via webex.

As recently as 10 days ago, state officials believed crude output would drop below 1.1 million b/d, Helms said. But, "we had four operators who came in with amended reports that showed significant production increases," which boosted output above that figure.

The director said Ft. Berthold-area production in March was up about 9,500 b/d.

Two of the operators that delivered large production increases operated exclusively in the Fort Berthold area, a prolific region of the giant Bakken Shale that underlies the western part of the state. A third operator had some production there.

"Those companies fracked a bunch of wells and increased production there," Helms said.

North Dakota's natural gas production in March increased to 1.709 Bcf/d, an all-time high, compared with 1.689 Bcf/d in February, Helms said, adding this was because the area where wells are being drilled has the highest gas-oil ratio.

Oil wells there are "very productive," with initial production rates of 3,000 b/d and gas-oil ratios two to four times what they are in other areas, he said. That area is in a triangle encompassing Watford City to Kildeer to Stanley.


The number of wells drilled but uncompleted, commonly called DUCs, rose by 13 in March from a month earlier to 920. Companies are using those wells in North Dakota as "their number one tool to manage cash flow," Helms said.

Operators are banking DUC wells awaiting an oil price they feel is sufficient to justify completing and producing them.

The inactive well count jumped by 84 in March from the previous month, to a total 15,023. These are wells that are not economic to keep producing at low oil prices, although oil prices have moved above $40/b for the last month or so.

Helms said a sustained 90-day period of $40/b WTI prices should be sufficient to start mobilizing drilling crews and putting wells on production.

As a result, "we have a couple of months to go before the confidence is there," he said.

On Thursday, NYMEX front-month crude futures settled at $46.70/b, up 47 cents. The same day, the North Dakota sweet crude price posted at Flint Hills was $33/b, DMR said. That is up from an average price of $26.87/b in April, $26.62/b in March and $18.07/b in February.

Also Thursday, 27 rigs were working in the state, the lowest number since July 2005, the agency said. The all-time high was 218 rigs working in May 2012.

"Operators remain committed to running the minimum number of rigs while oil prices remain below $60/b WTI," Helms said.

In the five most productive counties -- Divide, Dunn, McKenzie, Mountrail and Williams -- rig counts were down 81% (McKenzie) to 98% (Williams) from peak numbers.

Most of Williams County, located in the state's far northwest, is not economic, Helms said, adding "just a small part" of its southeast corner is economic.

Producing wells in the state numbered 13,024 in March, up slightly from 13,017 in February. Of this, 84% now produce from unconventional Bakken/Three Forks formations.
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