North Dakota oil operators took advantage of mild December weather and produced a record 1.4 million barrels per day that month, according to the Department of Mineral Resources.
While oil production grew nearly 2 percent, natural gas production jumped 5 percent in December to a record 2.65 billion cubic feet per day, according to the preliminary figures.
“What a great way to end the year,” Director Lynn Helms said during his monthly update on Friday.
The previous high, 1.39 million barrels per day, was set in October.
Natural gas flaring decreased slightly in December, but continues to miss the goals set by the North Dakota Industrial Commission.
“That’s going to really be our challenge going through the entire year of 2019,” Helms said.
Companies captured an all-time high of 2.1 billion cubic feet per day in December. Operators burned off 513 million cubic feet per day, or 19 percent of gas produced statewide. The Industrial Commission targets limit flaring to 12 percent.
Operators voluntarily restricted oil production by about 35,000 barrels per day in December to stay within flaring limits, Helms estimates.
Most of the flaring came from wells that are connected to a pipeline, but there is inadequate infrastructure to handle all of the gas, said Justin Kringstad, director of the North Dakota Pipeline Authority. Several gas processing plants are under construction and expected to be complete by the end of 2019.
“I think we can be confident that by the end of this year, we should get this gas capture thing back within the goals that the commission has set,” Helms said.
Oil industry layoffs
Despite the upward trend in oil production, at least one Bakken operator recently reduced the size of its workforce.
EOG Resources cut 20 company positions and 80 contractors in the Stanley area to bring the company’s staffing level in line with its current oil production level, Helms said. EOG said in a statement the company “remains committed to our North Dakota operations.”
“EOG continuously evaluates our staffing requirements and has adjusted our need for contract personnel,” the statement said.
EOG still has more than 200 employees and contractors in its Stanley office.
Helms said he doesn’t expect workforce reductions to be a “widespread trend.”
“There may be a few other companies follow their lead a little bit, but most of the major Bakken and Three Forks operators have a lot of drilling inventory and they're going to be actually growing their production not holding it steady or shrinking it,” Helms said.
Weather, shutdown impacts
January oil production is expected to be flat or slightly down, but severe cold in February is expected to lead to a production drop, Helms said.
Modern drilling rigs can handle the cold weather, but hydraulic fracturing is difficult in subzero temperatures, Helms said. Williston recently reported a record low temperature of 43 below zero.
“The temperatures and the snowfall that we’ve had have just been really difficult for companies to work in,” Helms said.
The recent federal government shutdown has delayed talks with the Bureau of Land Management over changes to how flaring is regulated on federal lands. Helms previously expected to have an agreement with the agency by February, but he now expects it to be complete by April. The BLM plans to defer oversight of flaring to state and tribal leaders.