North Dakota oil production likely to increase in September, but will continue on a downward trend for the long term, says regulator

By Georgina Mcartney

HOUSTON, Oct 24, -

North Dakota's oil production will likely have increased slightly in September, but it is still on course to decline in the long term due to natural decline of the wells.

North Dakota has the Bakken oilfield. This massive shale oil field helped the U.S. become the largest oil producer in the world. The Bakken oilfield is undergoing a consolidation wave and its wells have reached maturity, affecting production in the state that produces the most oil.

The state Industrial Commission released data on Friday showing that oil production fell by 10,000 barrels a day in August to 1,153 million bpd.

Justin Kringstad is the director of North Dakota Pipeline Authority. He said, "We are cautiously optimistic for September and October." North Dakota now has 28 active drilling rigs compared to 27 in September. This is up from 27 rigs last month, according the Department of Mineral Resources.

Nathan Anderson, Director of the North Dakota Department of Mineral Resources said that some operators dropped a few rigs in the past couple of months. Other operators picked them up.

Thirteen hydraulic fracturing teams are now operating in the State, up from twelve in September.

Anderson stated that the number of wells in the state continues to increase, but the outlook for production over the long term due to natural decline is flat or slightly negative.

North Dakota breakeven price, which is the amount companies need to make a profit, can range between $40 and $65 per barrel. Anderson added that many rigs have been set up outside the core of the basin, where breakeven is closer at $55 or $60 per barrel.

Anderson said that rigs had moved away from the basin's heart and that we were now seeing longer laterals.

He added that operators would move to the outer edges of the basin as they drilled deeper parts. They will continue to push boundaries with longer laterals, and other operational efficiency.

Around 35% of all wells in the state are now three- and four mile lateral wells.

The state regulator reported that Bakken crude oil delivered in Clearbrook, Minnesota was priced at 65 cents a barrel less than West Texas Intermediate crude on Friday.

(source: Reuters)