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Mark J. Perry

Mark J. Perry

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.…

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North Dakota's Bakken Oil Fields go from Strength to Strength

The "Economic Miracle State" of North Dakota pumped another record amount of oil during the month of October, producing more than 15 million total barrels in a single month for the first time ever, at a daily rate of 488,068 barrels (see chart above, data here). Compared to October of last year, oil production in North Dakota is up 42%, and production has more than doubled over the last two years, from 240,000 barrels per day in October of 2009.  North Dakota's rich Bakken oil fields produced almost 9% of America's domestic crude oil production for the month of October, up from less than 2% of the nation's oil in 2006 (data here).

North Dakota Daily Oil Production  

Other highlights of the October production report:

1. The number of new wells producing oil in the state increased by almost 1,000 over the last year to a new record of nearly 6,000 wells in October, up from just slightly more than 5,000 wells a year ago.

2. The amount oil produced per well also reached a record high of 82 barrels per day in October, which is almost 50% higher than the 55 barrels per day two years ago, and probably reflects both increasing productivity from technology and drilling in more productive areas. 

3. The combination of a record number of wells producing oil at record-setting productivity levels has put North Dakota on a trajectory to surpass both California (539,000 barrels per day) and Alaska (555,000 bpd) by as early as January 2012 to become the No. 2 oil-producing state in the U.S. (see chart above).  At the current pace of record-setting monthly gains, North Dakota's oil production is currently on track to break the 600,000 barrels per day level by next March. (Note: Due to a normal seasonal slowdown during some of the winter months, these predictions could be delayed for several months.)

4. At 488,000 barrels per day in October, North Dakota's oil production has now surpassed OPEC-member Ecuador's daily production of 485,000 barrels for the first time.   

As a result of the ongoing oil boom in the Bakken area, North Dakota continues to lead the nation with the lowest unemployment rate at 3.5% for October, more than 5 full percentage points below the nation's average 9.0% rate for October.  As reported earlier this week on CD, there are ten North Dakota counties with jobless rates below 2%, and Williams County, which is at the center of the Bakken oil boom, boasts the lowest county jobless rate in the country at 0.9%.

Bottom Line: The ongoing record-setting oil production in the Peace Garden State continues to make it the most economically successful state in the country, with record levels of employment and income growth, increasing tax revenues, the lowest foreclosure rate in the country, a strong real estate market, and jaw-dropping jobless rates in many counties of the Bakken region below 2%. "Drill, create and collect."

By. Mark J. Perry of http://mjperry.blogspot.com/

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.

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  • owen owens on December 09 2011 said:
    I know it all sounds rosy, but from what I heard this type of oil does not make much fuel oil or gasoline. It is mostly heavy crude that gets turned into asphault, which if used improperly [and most is] leads to many years of patch work after the first year of use is completed. Good for jobs, bad for the economy.
  • Doug on December 11 2011 said:
    It is my understanding that shale oil wells lose about 75-80% in two years. That means that between 1 and 2 years from now, all those 1000 wells sunk in the past year will be producing 20-25% of what they produced shortly after they began production. That means that, in order to keep up or increase overall production, the numbers of wells being drilled will have to increase exponentially.At some point the need for production will outstrip the ability to drill wells fast enough and/or the state will be covered in oil wells (according to the article there are already 6000 wells in the state). Using fracking, the footprint of each well is fairly large. Although I don't know the math off the top of my head, it seems peak production will be reached pretty quickly, and decrease rapidly thereafter.Does anyone know how soon that that is projected to happen?
  • synicalbastard on December 11 2011 said:
    The real questions are how long will it last and what will be the effect on the environment?
  • Gregg on December 11 2011 said:
    According to this article, the Bakken is producing nearly 15 million barrels per month. The United States alone, uses 20 Million Barrels per DAY. Humm. Sounds a bit short.
  • davidsritchie on December 16 2011 said:
    I would like to know how much brine water is being produced from all these oil wells and how much farmland is being eradicated because oil companies are dumping brine water on the farm land.
  • Bakken Boy on December 20 2011 said:
    The Bakken has enormous potential for North Dakota, Eastern Montana, and the country.The crude produced in The Bakken and other shale plays like the Eagle Ford, is a sweet crude, not heavy. It is the sweetest crude by API standards. It needs much less energy to refine into gasoline - and produces a hell of a lot of it. Bakken wells start out at about 1000 barrels per day and go down pretty quickly. It will take an exponential increase in drilling rigs to continue the upswing in production. Current estimates the Bakken will top out at around 1.2M bbl/day sometime in the next 5 years. However, this is not taking into account other formations with potential, like the tyler formation in Southwestern North Dakota and Northwesten South Dakota. Several wells are drilled on a pad Future development will be in the form of eight wells per 2 square miles - not that big of a footprint. See www.thebakken.net for info

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