North Dakota has officially lost its status as the nation’s second-biggest oil producer, but a new industry rapidly gaining momentum in the state has offset officials’ disappointment.
In the last three weeks, State Mineral Resources Director Lynn Helms has heard from companies interested in pursuing as many as 17 projects in North Dakota to store carbon emissions underground.
North Dakota for years has worked to create regulations and assume authority from the federal government surrounding the capture and storage of carbon dioxide from coal and ethanol plants and other industrial facilities. Researchers have also spent considerable time studying the geology of rocks deep underground in various parts of the state to see if they hold the right characteristics to store carbon dioxide, a greenhouse gas that contributes to climate change.
“Man, it’s cool to see all that bear fruit,” Helms said.
He spoke Friday in Bismarck at his monthly press conference, which typically focuses on oil and natural gas production. But his department is also tasked with permitting carbon storage projects, which are finally starting to come before regulators. Last month, the Oil and Gas Division held a first-of-its-kind hearing regarding a permit for the underground storage area that will make up part of Red Trail Energy’s carbon capture project at its Richardton ethanol plant.
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That project could be operational early next year, Helms said.
“If I sound a little excited, I am,” he said. “I’m just not too bummed out about going from No. 2 to No. 3 (in oil production).”
North Dakota ranked second, behind Texas, in oil production for nine years. It lost that status to New Mexico in July. The two states had been neck and neck for several months.
Drilling in the Bakken oil patch of western North Dakota took off in the mid to late 2000s. The region faces competition from the Permian Basin of Texas and New Mexico, where drilling is a more recent phenomenon.
“It’s a long-term trend," Helms said. "It’s not something that’s just a quick flash and we’re back to No. 2."
New Mexico has 82 rigs drilling for oil today, far more than the 27 operating in North Dakota. Helms said oil companies are drilling there so as to maintain government leases for the right to develop federal minerals. There is a lot of federal land in New Mexico, and efforts by the Biden administration to revamp its policies surrounding drilling could also play a role in the uptick in activity in that state, he said.
North Dakota produced 1.078 barrels of oil per day in July, the most recent month for which data is available. That marks a 56,000-barrel-per-day or 5% drop from June.
Helms anticipates production will grow again in the future, but he attributed the drop to five outages at natural gas processing plants this summer.
Those plants were undergoing upgrades or maintenance, as is common in the summer, said Justin Kringstad, director of the North Dakota Pipeline Authority. And although they process gas, not oil, their temporary closures had an impact on the production of both.
“When gas capture is limited, we’re seeing wells now choked back or shut in or curtailed in a way that we haven’t seen historically,” Kringstad said.
The outages at processing plants also caused an uptick in the wasteful flaring of gas, though officials don’t anticipate that will last. Producers flared 10% of all gas produced in the state in July, falling out of compliance with the state’s 9% target.
North Dakota produced 2.875 billion cubic feet of gas per day in July, a 4% drop from June.
The oil and gas industry took steps to alleviate the effects of the plant outages, Kringstad said. Outrigger Energy II’s Bill Sanderson Gas Processing Plant west of Williston had sat idle since it became operational earlier this year, but it fired up this summer to take in some of the gas displaced by outages elsewhere, he said.
“That collaboration is a very positive sign for the industry,” Kringstad said.
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