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:
As shown in the following graph, crude oil production increased again in August 2020. It is up 122,351 barrels of oil per day (bopd) over revised July amount, which follows a 148,343 bopd increase over June.
With a 45 day lag in reporting to allow data submission and collation, the production data for crude oil during May is now available for North Dakota.
The combined shocks of reduced demand for the pandemic and flooding the market by Saudi Arabia collapsed prices which then collapsed production. A glut of oil jammed the storage capacity for a while which further drove down the prices available to producers in North Dakota.
The impact on volume and value of production is staggering.
The graphs of production in this post demonstrate how rapidly a massive industry, like oil production across an entire state, can respond to price signals in a capitalist economy. That part is amazing to see.
May production data
Crude oil production in the state dropped to 858,395 bopd (preliminary) in May. This is down 362,624 bopd from the revised April level of 1,221,019 bopd. The April production was down 209,353 bopd from March.
Production data in North Dakota is routinely released on about the 15th of each month reflecting data for the second previous month. So the info just released on May 15, 2020 reports the March 2020 activity.
The radical drop in price due to the demand shock and supply shock will show up in production data for April, expected to be released about 6/15/20.
In February 2020, crude oil production in North Dakota averaged 1,451,029 bopd (preliminary), up 20,518 bopd from 1,430,511 bopd (revised) in January. This is the 4th highest level of output, behind the high water mark of 1,519,032 bopd in November.
Production is going to drop rapidly. Drop will be at least 20% of current production. I’ll make a not-so-wild guess decline will be a quarter or more (>25%).
Prices have collapsed due to a double black swan. The COVID-19 pandemic has caused a demand side shock.
Release of the December production data in North Dakota lets us look at production for the full year. Following graphs show the average daily production and total for the year. Multiplying the monthly data by the sweet crude price in North Dakota reported in the Director’s Cut lets us see the value of production by month and total value for the year.
North Dakota oil production in December 2019 is fourth highest level on record, after setting new production level in 5 of last 6 months.
Average daily production in the state was 1,475,685 barrels of oil per day (bopd) (preliminary) after hitting the highest level ever of 1,519,037 bopd (revised) in November. The November production broke the state’s record for the fifth time in six months, and the twelfth time in the last twenty months.
The routine record-level production is being achieved with stable and low level of drilling rigs and without the wild-west craziness in the local economy that existed before 2014.
Graph of the average daily production in the state and in the Bakken pool:
Crude oil production hit yet another record level in October at 1,517,796 barrels of oil per day (BOPD) (preliminary). September was not a record at 1,443,980 BOPD (revised). September was only the third highest production.
During 2019, record level of production was hit in October, August, July, June, and January. Record was broken in 2018 during December, October, September, August, July, and May.
What does the average daily production trend look like? Check it out:
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.