BISMARCK — North Dakota oil production held steady in July despite a slowdown in activity thanks to prolific wells in the core area of the Bakken where oil drilling is focused.
The state produced an average of 1.029 million barrels per day in July, with production increasing two-tenths of a percent since June, the Department of Mineral Resources said Friday.
Director Lynn Helms said while the slowdown in oil activity continues, production stayed flat in July due to extremely good wells in the Bakken core.
Some oil wells in northeast McKenzie County and northwest Dunn County have initial production rates of more than 3,000 barrels of oil per day, about twice the rate of an average Bakken well.
“That’s just how good these wells are,” Helms said. “That really is the main reason they’re able to stay above 1 million barrels per day even though they’re only completing 40 to 45 wells in a month.”
The focus on the core is also why natural gas production increased by 2 percent in July to nearly 1.7 billion cubic feet per day while oil production stayed flat.
But with the industry slowdown expected to continue due to low oil prices, Helms said he expects the state’s oil production to fall below 1 million barrels per day before the end of 2016.
“Psychologically, that’s going to send an interesting signal to the market,” Helms said.
Thirty-two drilling rigs were active in North Dakota on Friday, and Helms expects that to fall to about 30 heading into the winter. The number of wells that have been drilled but are waiting on hydraulic fracturing crews increased 25 to 912 at the end of July.
Companies have 10 fracking crews now in North Dakota and are expected to cut that to five as winter approaches, Helms said. That will allow operators to keep “just the minimum amount of capital expenditure that they need to make to maintain or even allow production to decline a little bit,” he said.
Helms noted a concern for North Dakota is that some Bakken operators have recently shifted resources to other areas, including the Permian Basin in west Texas, where operating costs are cheaper and weather is more favorable.
The percentage of gas flared increased slightly from 9.8 percent to 10.5 percent in July.
An estimated 350,000 barrels per day left the Bakken by rail in July, said North Dakota Pipeline Authority Director Justin Kringstad.
The top destination for Bakken crude-by-rail shipments had been East Coast refineries, but in July the East and West coasts each received about 42 percent of Bakken rail shipments. Kringstad attributed the shift to market prices.
Overall, about 32 percent of North Dakota oil was shipped by rail in July, compared with 59 percent that was transported by pipeline, Kringstad said.