Category: Energy

Market price of oil collapsed last spring. In looking at the data by month, you can see a one month lag in the drop of production. As a result, the value of oil produced in North Dakota dropped substantially last spring and summer.

As the price of North Dakota light sweet dropped in March to $20.33 from $37.21 the prior month, production slid about 210k bopd in April to 1.225 bopd.

The shock decline in April 2020 to $9.16 from $20.33 led to a drop of production in May of 363K bopd, with average output down to 862k bopd.

A further drop in May 2020 to $7.92 from the prior $9.16 led to another month of low production in June at 895k bopd, an increase of a mere 33k bopd.

Average prices recovered the next month and then over the next seven months were in a range between $29 and $33. Production increased to the range of 1.0m bopd to 1.2 bopd since prices recovered.

Prices have accelerated in the last four months.

The driver for this wild roller coaster ride can be seen in the average of monthly prices:

Graph above shows dramatic drop in production back in May and June 2020, caused by the drastic drop in prices. Record output in November 2019 of 1,519,032 bopd slowly declined then took a sharp drop to below 900,000 bopd in May and June.

Recovery thereafter increase production to just over 1.2M bopd in September, October, and November 2020. Production since then has dropped, with a significant decline in February 2021.

From high of 1,519,032 bopd in November 2019, two low of 862,349 bopd in May 2020, to high of 1,226,549 bopd in November 2020, to drop due to the weather of 1,083,020 bopd in February 2021.

Quite a roller coaster, huh?

For more detail and to drill down deeper, including Bakken/Three Forks only and statewide data, check out:

Value of the crude oil produced in North Dakota dropped in 2020 due to the drop in demand caused by the pandemic. This produced a double hit: drop in volume and drop in crude oil prices.

Values calculated by multiplying the production volume by the average price of North Dakota light sweet in the state as mentioned in each months Director’s Report.

Value of production in the last four years has been:

• $16.2B – 2017
• $24.1B – 2018
• $24.1B – 2019
• $13.0B – 2020

In graph form, this looks like a roller coaster ride:

Comments in the Bismarck Tribune and Williston Herald provide context on the drastic drop in oil production during May.

The Tribune was more dramatic in describing the drop.

Oil production in North Dakota “cratered” during the month, as described by the Bismarck Tribune on 7/17:  North Dakota shatters previous record oil drop as pandemic hits industry hard.

Notice the “shatters” description in the headline.

Impact of pandemic was to “tank” the production.

Director Helms referred to the drop as a “five alarm fire” for the industry.

Continue reading “Additional comments on drop in oil production in May 2020.”

Crude oil production in the state dropped to 858K bopd in May, which is a 362K bopd drop for the month and a 661K bopd drop since the record high of 1,519K bopd in November 2019.

Price of oil also collapsed, which means the value of production shrank.

Graphs of monthly production and prices can be seen in previous post.

Check out my calculation of the value of monthly production the combination of dropping output and dropping prices:

Just as a guess, I think production could be opened up almost as fast as it was cut back. More on that thought at the end of this post.

Activity counts

Continue reading “Deeper look at the May 2020 drop in North Dakota oil production.”

Following charts show the production levels in the state before the double black swan events of pandemic and price war hit the market.

Next post will discuss the production levels and those two black swans.

Production in state and Bakken only:

For longer term perspective: Continue reading “Crude oil production levels in North Dakota in February 2020.”