Outrun Change

Additional comments on drop in oil production in May 2020.

Photo by James Ulvog.

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.

Read more…

Deeper look at the May 2020 drop in North Dakota oil production.

Idle drilling rigs parked to the west of Williston. Photo by James Ulvog.

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

Read more…

Crude oil production levels in North Dakota in February 2020.

Photo by James Ulvog.

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: Read more…

North Dakota breaks record oil production level for three months running.

Photo by James Ulvog.

Crude oil production in North Dakota has broken a record for three months in a row. This is not a record breaking number of record breaking months though. In the post-bust time since 2014, the record number of record levels was July 2018 through October 2018, or four months in a row. Back then production was 1.27m bopd in 7/18, 1.29m, 1.36m, and 1.394m, before sliding a bit to 1.378m in 11/18.

Production was 1,477,394 bopd (preliminary) in August 2019, up 2.18% from 1,445,934 bopd in July.

Check out the production trend:

Read more…

Two percent increase in North Dakota oil production in June 2019.

Photo by James Ulvog.

Oil production in the state increased 2.15% in June, growing an average of 30,004 bopd, from 1,394,648 bopd average in May (revised) to 1,424,652 in June (preliminary). That is after a lull from October 2018 through May 2019, when the average production increased a mere 648 bopd.

Before showing the production graph, a few comments about prices and rigs in operation.

Prices have declined substantially in the last couple of months:

• Sweet crude in North Dakota
• $48.00 March
• $52.50 April
• $50.50 May
• $43.10 June

The drop, especially in June, shows up in the value of crude production:

The productivity of wells has increased over the years. The result is the count of completed wells is largely independent of the number of drilling rigs in operation.

Consider an overlay of the completed well count and the rig count:

Read more…

North Dakota oil production remains steady in May 2019.

Photo by James Ulvog.

Oil production in North Dakota increased slightly to average of 1,393,284 BOPD in May 2019 (preliminary), up 799 BOPD from April (revised).

Rig count has been flat, ranging from low of 61 to high of 67 during the last 12 months.

An odd factor this month is small increase in production (up 799 bopd/day, 0.06%) with increase in producing wells of 194 (+1.26%).

Lynn Helms is cited in article at Bismarck Tribune (7/16/19 –Oil Production steady in May, but transportation woes persist) suggesting this is due to old legacy wells that produce around 25 barrels a day being closed in for the winter and then brought on-line from late spring until fall.

Economic driver explaining this is the costs of plowing roads and hauling oil makes such wells uneconomical in the winter. Thus they are taken off line in the winter.

The number of inactive wells dropped by 69 in May.

The two month changes are:

• 141 – drop in inactive wells
• 185 – well completions
• 337 – increase in producing well count

That leaves an increase of 11 producing wells that isn’t explained by drop in inactive wells and completions.

Here is what the average production looks like:

Read more…