North Dakota oil production down due to low oil prices
By Ernest Scheyder
Aug 12 (Reuters) – North Dakota’s daily oil production will soon drop below 1 million barrels if it has not already done so, a level not seen since the summer of 2014, and a recovery would take at least a year, state regulators said on Friday.
The prediction came as yet another ominous sign for the No. 2 producing state, where Continental Resources Inc, Whiting Petroleum Corp and others have curtailed output and slashed costs in response to the slump in oil prices.
“Oil prices really just seem to be stuck in that $40 to $48 per barrel range,” Lynn Helms, head of the state’s Department of Mineral Resources, said on a conference call with reporters.
“We’re still looking at needing a $50 price point for increased hydraulic fracturing activity in North Dakota.”
Daily oil output fell 2 percent in June to 1.03 million barrels of oil per day (b/d), according to the department, which reports on a two-month lag.
The drop reflects a trend that started in 2014, when output started to track down with oil prices.
If the trend continues, statewide production will fall below 1 million b/d soon, Helms said, noting it might have already done so this month.
“We’re not completing enough wells to maintain production,” he said.
North Dakota first produced more than 1 million barrels per day of oil in the summer of 2014, a milestone that was celebrated statewide.
If output falls below that mark it could take at least a year to recover, Helms said. “It’s going to take a significant amount of time and effort to move it back up again.”
In a positive sign for the industry, the break-even price for oil production at existing wells, statewide, has slipped to $26 per barrel, Helms said.
While the number does not take into account the cost of drilling and fracking new wells, it shows that existing production remains profitable for companies across the state that have aggressively cut costs to survive.
“You’re really starting to see the effect of cost cutting in the industry on break-even prices,” Helms said.
Natural gas output rose about 1 percent to 1.66 billion cubic feet per day, as producers collected more gas for processing.
The state’s rig count stood at 33 on Friday, up from a recent low of 27.
(Reporting by Ernest Scheyder; Editing by Chizu Nomiyama and Richard Chang)