North Dakota natural gas output hits milestone

OREANDA-NEWS. April 21, 2016.  Natural gas production from North Dakota reached an all-time high in February as flaring declined and gas output from oil wells in of the Bakken and Three Forks formations increased.

Gas production in February rose to 1.69 Bcf/d (48mn m?/d), up by 3pc from January and about 1pc higher than the previous record set in November 2015, according to the North Dakota Department of Mineral Resources.

The amount of flared gas in February dropped to 11pc, down from 13pc a month earlier as processing capacity rose.

The Tioga gas plant increased its operational capacity to 84pc, up by 5 percentage point from January.

Nearly all of the gas produced in North Dakota comes from the state's oil wells. But gas production grew despite a decline in producing wells. The well count dropped at the end of February to 13,012, down by 129 from a month earlier.

Producers have been focusing on the most prolific areas of the Bakken and simultaneously shutting smaller, less profitable wells amid a prolonged downturn in energy prices.

Oil futures settled yesterday at \\$41.08/bl, 27pc lower than the year earlier.

Spot gas prices on Northern Border pipeline at Ventura, Iowa, averaged \\$1.95/mmBtu in February, down by more than half from a year earlier and was down by 16pc from January. Northern border can receive gas from North Dakota and delivers into major markets in the midcontinent, including Chicago.

Oil production in North Dakota has declined since December and in February averaged at 1.12mn b/d, down by 4,129 b/d from January, according to the agency data.

Gas production showed more modest declines in December and January as companies drilled in areas with higher gas-to-oil ratios, the state agency said.

"North Dakota shallow gas exploration could be economic at future gas prices, but is not at the current price," North Dakota Mineral Resource director Lynn Helms said.

Gas prices across the US have remained low this year on production gains, mild weather and record inventories.