As North Dakota oil production returns to record levels, a new analysis shows the state has 20 to 60 more years of drilling activity in its future.
The state produced an average of nearly 1.27 million barrels of oil per day in July, a new all-time high, according to preliminary figures released Friday by the Department of Mineral Resources.
July oil production saw a 3.4 percent increase and exceeded the previous record of 1.25 million barrels per day set in May.
Also Friday, the North Dakota Pipeline Authority presented new projections about how long the development of Bakken and Three Forks wells may last in North Dakota under current oil prices.
“There’s still somewhere between 20 and 60 years of drilling inventory in the state at today’s price point,” Director Justin Kringstad said. “That only gets larger as prices increase.”
Kringstad, who presented to the North Dakota Industrial Commission, said his findings are based on the industry continuing at a pace of adding 1,200 oil wells each year. The projections also consider current technology and don’t include the potential for enhanced oil recovery.
Factors that could limit North Dakota’s oil production growth continue to be workforce shortages and natural gas flaring, said Director of Mineral Resources Lynn Helms.
The state has 65 drilling rigs operating as of Friday, a number that could be closer to 70 if the industry could hire more hydraulic fracturing crews, Helms said.
Natural gas production hit a record 2.4 billion cubic feet per day in July, a 4.3 percent increase.
The volume of natural gas flared in July also hit a new high as operators flared about 436 million cubic feet per day due to inadequate processing and pipeline capacity.
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As a percentage, flaring statewide increased from 17 to 18 percent in July. For Bakken natural gas, which is what the Industrial Commission’s gas capture targets are based on, the flaring percentage was 16 percent, missing the target for the third month in a row.
The state’s policy calls for operators to flare no more than 15 percent of Bakken natural gas, or capture 85 percent.
“We’re not meeting the commission’s gas capture goals,” Helms said.
Helms attributed some of July’s increase to significant downtime that month at the Andeavor Robinson Lake gas plant.
Regulators have not completed an analysis of companies’ flaring figures to determine if some operators will be required to restrict oil production for exceeding the state’s flaring limits.
“At these kind of volumes, I would expect there to be restrictions,” Helms said.
However, in June there were 12 companies that flared more than 15 percent of Bakken natural gas and none received oil production restrictions under the current policy.
Most of the flaring comes from wells that are connected to a pipeline but there is insufficient capacity or other infrastructure to capture all of the gas, Kringstad said. The state is seeing an uptick, however, in new wells that are not yet connected to a gas pipeline, he said.
North Dakota now has 14,972 producing oil and gas wells, another record for the state.