North Dakota oil production hit a record 1.39 million barrels per day in October, a 2.4 percent increase as operators accelerated production ahead of winter, the state’s top regulator said Friday.
Natural gas production also hit another record, but so did the volume of gas that was flared. The percentage of gas flared in October grew to 20 percent, the highest the state has seen since August 2015.
Lynn Helms, director of the Department of Mineral Resources, said he expects oil production to slow due to lower oil prices and winter weather setting in, which makes oil activity more difficult.
“The signals I’m hearing from industry is they’re going to slow investment through the first quarter of next year to some extent,” Helms said. “Our anticipation is that we plateau or we see much slower growth in production from now until April or May.”
The price for West Texas Intermediate oil was about $51 a barrel on Friday. Justin Kringstad, director of the North Dakota Pipeline Authority, estimates that producers are receiving about $8 to $10 less for a barrel of Bakken crude.
Refineries that serve the Clearbrook, Minn., market were recently down for maintenance, which caused oversupply and congestion in the market and led to a drop in the price for Bakken crude, Kringstad said. The price has improved substantially and should return to a “new normal,” he said.
Kringstad also projected more price volatility for Bakken crude in 2019, in part due to oil production exceeding pipeline capacity.
Challenges with capturing natural gas also will continue to affect production until construction of gas plants, pipelines and other infrastructure catches up.
The industry produced 2.56 billion cubic feet per day of natural gas in October, a 1.4 percent increase since September, according to the preliminary figures.
Operators captured nearly 2.04 billion cubic feet of natural gas per day, but flared about 527 million cubic feet per day, an all-time high.
Sixteen percent of the flaring came from wells that are connected to a pipeline, but the pipeline, natural gas processing plant or other infrastructure was inadequate to capture all of the gas, Kringstad said. The remaining 4 percent of flaring came from wells that are not connected to a pipeline. Several natural gas processing plants are under construction or in development to catch up to the production.
The flaring figures mean the industry fell short of the North Dakota Industrial Commission goal of capturing 85 percent of Bakken gas for the sixth month in a row. Regulators are evaluating the figures to determine if any companies will be ordered to restrict oil production for excessive flaring, though those production limits are rare.
Eleven companies captured less than 85 percent of Bakken natural gas in September, according to the department. None were required to restrict oil production.
The gas capture goal increased to 88 percent for November production, which will be released in January.
Starting as early as February, the state will likely change the way it calculates the flaring percentages, removing flaring from Fort Berthold trust lands from the state calculation. The change in regulation is due to a shift from the Bureau of Land Management to defer regulation of flaring on tribal trust lands to the Mandan, Hidatsa and Arikara Nation.
In October, flaring was greatest on Fort Berthold trust lands at 30 percent, the department said. Helms said he was unsure if the state would continue to report statewide flaring figures that include Fort Berthold trust lands. State regulators are meeting with the BLM weekly to develop a memorandum of agreement by early February, Helms said.
The changes in regulation also will mean the BLM will require royalties to be paid on natural gas that is flared from wells that are out of compliance with state or tribal regulations.