North Dakota crude output dropped in August

OREANDA-NEWS. October 14, 2015. North Dakota's crude and natural gas output fell in August, with operators cutting back on well completions as low commodity prices took their toll, according to state data released today.

August crude output averaged 1.19mn b/d, down by 20,500 b/d or 1.7pc from the previous month. Natural gas production fell by about 1pc to 1.64 Bcf/d (46mn m?/d) from July when it had reached an all-time high.

The August figures mark the first time since 2003 that production in the state has dropped from July to August.

"August is almost always an up-month. This is a reflection of what's really happening in the industry in this prolonged low price environment," said Department of Mineral Resources director Lynn Helms.

The state today has 67 active rigs, down from 71 in September. The all-time high was 218 rigs in May 2012.

At the end of August, an estimated 993 wells were waiting on completion services, 79 more than at the end of July.

North Dakota is considering allowing drillers to let uncompleted wells sit idle for an extra year in "temporarily abandoned" status because of the low oil prices.

Helms said he is planning to discuss the issue with the state's Industrial Commission at a meeting on 27 October.

The top ten producers in North Dakota can maintain production at WTI Nymex prices of \\$50/bl because of reduced well costs and lower operating expenses, but prices below \\$50/bl will continue to push declines, Helms said.

WTI Nymex November crude futures fell today by 44?/bl to settle at \\$46.66/bl.

North Dakota is home to the Bakken formation, the third most productive US shale field. Crude production has grown sharply there from about 150,000 b/d in 2008 to about 1.2mn b/d, creating a major supply basin which has changed US market dynamics.

About 98pc of drilling in North Dakota now targets the Bakken and Three Forks formations.

The percentage of North Dakota crude moving by rail in August comprised 47pc of all production, compared to 45pc by pipeline.

About 19pc of produced gas in August was flared, as the state continues to grapple with a lack of takeaway capacity.

North Dakota officials voted last month to give crude producers more time to meet natural gas capture targets as the collapse in commodity prices has delayed infrastructure projects they say are needed to reach the state-mandated goals. Under the new regulations, producers must cut gas flaring to 15pc by November 2016.

North Dakota has been phasing in the regulations to cut flaring of gas, beginning in 2014.