WILLISTON – Early March oil production numbers show that North Dakota will likely drop below 1.1 million barrels per day for the first time since June 2014, the state’s top oil regulator said.
An official update will be released next week, but Director of Mineral Resources Lynn Helms told an oil industry group in Williston he expects to see a “severe” production drop.
"It's going to be bad,” Helms told the Williston Basin chapter of the American Petroleum Institute Tuesday night.
North Dakota saw a smaller than expected drop in oil production in February as more companies put fracking crews to work to complete wells and maintain cash flow.
The state produced an average of 1,118,333 barrels of oil per day in February, a 0.4 percent drop from January, according to preliminary figures released in April.
But March figures, scheduled to be released May 12, are reflecting the more significant production drop Helms had been anticipating.
“I think that’s a significant milestone,” Helms told the oil industry group.
The declining North Dakota oil production – down from the record 1,227,483 barrels per day set in December 2014 – is prompting Helms to reevaluate an earlier projection he made that the state could one day produce 2 million barrels of oil per day.
“It’s kind of taken away hope of getting to 2 million barrels per day,” Helms said.
Low oil prices are forcing operators to focus drilling activity only in the core areas of the Bakken where wells have the greatest production. As oil prices recover and drilling expands to other areas of the Bakken, those high-producing wells will be declining, Helms said.
“It’s really kind of doubtful that we’re going to make that (2 million barrels per day) because we’re drilling everything in the core where the best wells are,” he said.
Helms said he still thinks North Dakota could hit 1.8 million barrels per day.
Monte Besler, an oilfield consultant known as the FRACN8R who was among those at Tuesday’s event, pointed out that Helms’ projections are based on today’s technology, but advancements could allow operators to recover more oil.
“We don’t know where that number is going to end up at for sure,” Besler said.
Helms also spoke Tuesday night about several industry efforts to increase the amount of oil recovered from the Bakken, including pilot projects planned this year to test enhanced oil recovery techniques.
Helms continues to project that North Dakota will eventually have 55,000 to 65,000 oil wells. The state has more than 13,000 producing wells now.
North Dakota oil production is second in the U.S. to Texas, which produced 3.23 million barrels per day in February, according to the U.S. Energy Information Administration.