State regulator: North Dakota oil production expected to remain steady, despite the price decline

North Dakota's regulator stated that energy companies will likely keep crude production steady in North Dakota this year, the state with the third largest oil production in the United States, despite the sharp drop in oil prices following the signing of an interim agreement between the United States, Iran, and the end of their war.

The oil prices dropped on Thursday, reaching their lowest level since March's first trading day during the Iran War. U.S. West Texas Intermediate subsequently pared its losses to settle down at $76.60 per barrel, a 0.3% decline.

Nathan Anderson, the director of North Dakota’s Department of Mineral Resources said that while oil prices have dropped from an average of $95 per barrel during World War II, they remain historically high. He said that operators in North Dakota continued to produce between 1 and 1.5 million barrels per day even when oil prices were at $60. They expect similar production if prices remain the same, along with an increase in drilling activity.

Anderson stated that two operators have announced plans to add new rigs. Anderson, speaking at a Bismarck media briefing, said that one is the billionaire Harold Hamm’s Continental Resources and another is a private operator who will add a rig in July. The number of rigs is an indicator for future oil production.

The state regulator reported that there are 26 drilling rigs operating in North Dakota. This is unchanged from the previous month. There are 12 hydraulic fracturing teams active in North Dakota, one less than the previous month. In May, the regulator issued 93 permits for energy companies, up from 83 in April. In April, crude oil production fell slightly. North Dakota wells produced 1,137.155 bpd during April, down 6,000 bpd compared to the previous month. Anderson attributed this decrease to a slight slowdown in the completion rate of the wells.

North Dakota's oil data is usually two months behind. The state heavily relies on the tax revenue generated by oil and gas sales to fund projects and infrastructure.

"With permits in place, (hydraulic frac) crews on the job and rig counts steady or increasing, I wouldn't expect (oil) to drop significantly at all. "My experience is that $75 oil is a good price," said Anderson. He has advised Chevron previously and worked for PDC Energy for close to 20 years. (Reporting and editing by Mark Porter, Rod Nickel and Siddharth Cavale in New York)

(source: Reuters)