Tuesday, November 5, 2024

North Dakota Oil Output Jumps in May

Posted by July 11, 2015

 

North Dakota's daily oil production rose 3 percent in May, state regulators said on Friday, hinting that the state's Bakken shale formation may be more resilient to sliding crude prices than expected.

The state's well count hit a record high in the month with producers deciding to hydraulically fracture more freshly drilled wells, bucking a trend to mothball them. Drilling permit applications also spiked.

"I was surprised by the increase in output for May," said Lynn Helms, head of the state's Department of Mineral Resources (DMR). "It's pretty astounding at how good (oil producers) have gotten at what they do."

The data signaled that Whiting Petroleum Corp, Continental Resources Inc and other producers in the state have been able to weather a more than 50 percent drop in U.S. crude prices since last summer.

North Dakota, the No. 2 U.S. crude producer, had output of 1,201,159 barrels of oil per day (bpd) in May, up from 1,169,045 bpd in April, according to the DMR, which reports on a two-month lag.

Output had dropped in April.

The number of drilling rigs has plunged in the past year, to 73 from 189, and the state's rig count has not been this low since 2009. Each rig, however, now pumps more than twice as many barrels as rigs did six years ago.

Initial production rates - measuring a well's ability to produce as soon as it starts pumping - jumped as much as 20 percent in May from April levels, showing that oil producers' focus on technology over rig count is paying off.

Drilling permit applications rose 28 percent from May to June, hinting that producers believe they'll soon have to drill more wells to maintain long-term output targets.

Helms said June data could show an increase in production as well, although Francisco Blanch, an analyst at Bank of America Merrill Lynch, said the outlook remains for output to fall off after June,

"I would expect the data, on a forward basis, to start looking weaker from a production standpoint," he said. "It won't be a huge drop, it may not matter a lot to the market."

Natural gas output for May rose 6 percent, and the number of producing wells in the state hit a record high of 12,659.

(Reporting by Ernest Scheyder; Additional reporting by Jessica Resnick-Ault in New York; Editing by Marguerita Choy; and Peter Galloway)
 

Related News