North Dakota Sees Record Drop in Production

The past years' drop in oil prices has hit the industry in North Dakota fairly hard. April was another tough month for the industry as production dropped a record 70,000 barrels per day.

The state lost two rigs from April to May, with the number dropping from 29 to 27. But with oil prices flirting with $50 per barrel, the rig count recently rebounded by one.

Lynn Helms, director of the North Dakota Department of Mineral Resources, commented that the state has hit a record number of inactive wells. He noted that in Williams County, which includes the town of Williston, there are no active rigs.

The state hit its peak production in December of 2014 at 1.23 million barrels per day. Helms also said that oil sands production levels could dip below one million per day before the end of 2016, if prices stay below the $50/bbl. mark, but added that production could stabilize or increase if the prices hit or exceed that mark.

The Department of Mineral Resources stated that there were 66 drilling permits issued in April, and 42 in May. Natural gas production in the state also saw a decline in April, dropping 5.5 percent to 1.62 billion cubic feet per day.

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Last month, Governor Jack Dalrymple called for a decrease in the state budget, since tax revenues are down and the budget outlook for the state is different from two years ago, when the price of oil was topping $100 per barrel.

According to the U.S. Energy Administration, "wasteful" flaring in the natural gas industry is down this year. Flaring, which involves burning off gas at wells not connected to pipelines, was down to 10 percent in March, as opposed to 36 percent in January of 2014.

By Lincoln Brown for Oilprice.com

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