Oil producers operating in North Dakota have idled more than a quarter of the oil wells in the state, the AP reported, citing a statement by a state regulator to local daily the Bismarck Tribune.
The collective output of the wells idled since the start of March, which numbered 4,600, was some 260,000 bpd, the State Mineral Resources Director Lynn Helms, told the Bismarck Tribune. This is a large portion of the state's total oil output, which averaged some 1.45 million bpd in February, according to data from the state's Department of Mineral Resources.
During that time, North Dakota shed as much as 40 percent of drilling rigs, proving Washington officials arguments that the U.S. did not have to deliberately cut oil production because the low-price environment would force voluntary production cuts to curb the cash bleeds that most producers are experiencing because their breakeven level is higher than current benchmark prices.
Some North Dakota oil producers, according to Helms, are considering building storage facilities near the wells, to stock up on the crude they have already pumped out, and sell it later when prices improve.
Meanwhile, in Texas, the state energy industry regulator is hearing statements for and against a mandatory cut in oil production. Smaller independents seem to mostly back the cuts while larger companies, including Exxon Chevron, and Marathon, are against them.
For the smaller companies, statewide production cuts would be beneficial, helping them continue to sell some oil, according to one industry executive. Larger companies are naturally opposed because they have more cash reserves and lower production costs that will ensure their survival anyway.
The hearing follows the announcement of historic production cuts among the members of OPEC+ and additional cuts coming from other non-OPEC producers such as Norway and Brazil. Even these moves, however, were not enough to lend support to U.S. oil prices.
WTI continued to decline this week, dropping to $20 yesterday, after the API reported a substantial crude oil inventory build of over 13 million barrels.
By Irina Slav for Oilprice.com
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