North Dakota oil production up slightly, but slump continues

North Dakota oil production recovered slightly in June but was still near historic lows as the pandemic-induced petroleum slump continued. The report was issued as Baker Hughes Co. indicated only eleven rigs are actively drilling for oil in the state.

North Dakota, the nation’s second-largest oil-producing state, pumped out 890,109 barrels per day in June, up 3.6% from May when output hit a seven-year low reported the Minneapolis Star Tribune.

Natural gas production in June increased 2.3% from the previous month, tallying 1.97 million MCF per day. (An MCF is 1,000 cubic feet of natural gas.)

North Dakota oil and gas production hit all-time highs in November before falling somewhat and then plummeting in April and May after COVID-19 took hold.

Another poor showing in June was expected, though production has since risen as the benchmark U.S. oil price has inched above $40 a barrel in the past six weeks. West Texas Intermediate (WTI) closed Friday around $42 a barrel.

“We think at these prices, much of the shut-in production will come back online,” Lynn Helms, director of the North Dakota Department of Mineral Resources, said Friday in a video conference.

This year’s oil bust forced U.S. producers to shut-in thousands of operating wells. But output has increased in recent weeks as some of those wells have reopened.

Because of that, Helms said he’s “pretty confident” North Dakota production climbed back above 1 million barrels per day in July. Still, “we don’t want to get too excited.”

The outlook for new wells is grim right now. “Drilling is not picking up,” he said.

There are currently only 11 drilling rigs operating in North Dakota, and while that number has been stable since early June, it’s well below the 62 rigs in January.

The rig count is an indicator of new wells being drilled. For North Dakota’s oil production to grow beyond simply reactivating shut-in wells, drilling has to significantly increase, Helms said.

Source: Minneapolis Star Tribune