North Dakota crude production to increase as operators target high oil prices

A state regulator announced Tuesday that North Dakota's crude production is expected to increase in the coming months due to surging oil prices, which are encouraging operators to increase their activity. Operators in North Dakota, the third largest oil producing state, are responding to higher oil prices by?boosting? output from existing wells and holding back on new drilling due to price volatility linked to the Iran War. U.S. crude oil prices were around $93.63 per barrel on Tuesday, an increase of about $4.02; oil due to be delivered in six months was around $76.50, a 17% increase compared to before the war started.

The decision to increase drilling is based on futures prices, not 'daily price movements'. This is because it takes six to nine months for a well to produce its first oil. According to Nathan Anderson, Director of the North Dakota Department of Mineral Resources, there are 10 hydraulic fracturing teams currently operating in the state. One operator is set to hire an additional 'rig and frac team' in July. According to Anderson, there has been an increase of 13% in the deployment of workovers rigs in North Dakota. This is due to operators looking to optimize their existing production. Workover rigs tend to be used for maintaining existing wells, rather than drilling new ones.

Anderson stated that the March production will likely increase. Anderson said that operators were hesitant to increase rig activity due to the uncertainty of the Iran conflict and the volatility in oil prices. Since the beginning of the current conflict in Iran, U.S. Crude Futures have traded between a high of $119.48 per barrel on 'March 9' and a low price of $69.20 on March 2. According to the latest Department of Energy data, oil production in North Dakota rose by 4,000 barrels a day in February to reach 1.13 million bpd. (Reporting and editing by Daniel Wallis in Houston, Georgina McCartney from Houston)

(source: Reuters)