In July, the state energy wizards set four record levels of production:
Barrels of oil equivalent (converting gas into equivalent amount of oil and combining with crude production)
Number of producing wells
Breaking production records in North Dakota, New Mexico, and Texas is something to celebrate if you like being able to get gasoline for your car whenever you feel like doing so, or if you like having gas available at reasonable prices in spite of when, oh, say, someone drops a bunch of bombs on Saudi production facilities.
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
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:
Latest guess, from someone who has a clue about such issues, on where production is going in North Dakota is somewhere around 1.5M or 1.6M barrels a day late this year or early next year.
Huge finds off coast of Guyana and in New Mexico/Texas.
Question needs to be asked again: What Peak Oil?
The Million Dollar Way – 7/7/19 – ND Oil Production to Surge – Lynn Helms. Citing another source, the article says Lynn Helms, director of DMR, thinks production in North Dakota will surge later this year after gas infrastructure construction is done.
Record high level of oil production in the state was 1,403,844 barrels of oil per day (bopd) in January 2019. April production averaged 1,391,188 bopd (preliminary).
Before the slump in prices and drilling, the record high was 1,229.572 bopd in December 2014.
Since production bottomed out at an average of 942,322 bopd in December 2016, production has been climbing.
Production in June 2018 and every month since then has been above the December 2014 level. Even with winter weather, production has been in the neighborhood of the 1.4M bopd level for the last eight months, apart from small drop in February.
Graph of average production in the state and Bakken formation since 2008:
Preliminary production in January is 339 barrels a day below the revised amount for December. Here is how close January’s output came to the record high in December:
1,402,741 – December 2018 – record high
1,402,402 – January 2019 – preliminary
Production data usually changes in the month following initial release. The pattern I’ve noticed is a data for a well or three arrives after the cutoff for the monthly report. So, late reporting for a few wells could push the January 2019 data into record territory.
Before showing a graph of production, wanted to bring in some new data reported by the state regulator. The “Director’s Report” lists the average price for sweet crude in the state and has done so for many years. The report just started listing the average of West Texas Intermediate (WTI) pricing for the month.
There is a discount from the price realized in North Dakota compared to WTI because of the cost of transport. That spread, so I understand, has fallen since the DAPL was completed. Here is a revised graph of average price in ND to include an average of WTI:
Total production of oil in North Dakota in 2018 set a record as did the average daily production. Prices have recovered from their low which means the value of that production is going up but not yet close to setting a record.
All of the following data is from a spreadsheet I maintain, with the raw data pulled from various reports published by the North Dakota Department of Mineral Resources.
Average daily production rose to 1,249,049 bopd in 2018, up from 1,081,543 bopd in 2017. That is an increase of 167,505 bopd, or 15.5%. Previous record was 1,184,009 bopd in 2015.
Average daily production:
Total production for the year was 455,902,738 barrels, an increase of 61.1M barrels over the 394.8M produced in 2017.
While pulling together the graphs of oil production in North Dakota for 2018, I wondered what the trend of well completions might look like.
So, pulled a graph together. Primary source of my data is a spreadsheet I maintain of the monthly information released by the N.D. Department of Mineral Resources. Well completions is one of many data points accumulated on the spreadsheet.
Oil production in North Dakota hit an all time high of an average of 1,229,572 barrels of oil per day (bopd) back in December 2014. The effort by Saudi Arabia to flood the market in order to drive down prices in order to collapse the US shale industry slowed production in North Dakota but didn’t succeed in killing the shale sector.
Output fell to a low of 942,322 bopd in December 2017. Output then started rising with a typical slowdown in winter of 2017/2018. After the winter lull production again climbed.
In 2018, producers in North Dakota broke the record level of production six times in the last eight months. The record-breaking months:
Let’s look at the drilling and completion work driving the rising levels of production.
Keep in mind that the drastic improvements in productivity has decoupled the number of drilling rigs from the number of wells drilled.
Also keep in mind the ‘fracklog’, or the number of wells in the backlog of wells that have been drilled but not yet completed. In essence, wells are drilled and then left in inventory. When the expectations of prices are right and there are completion crews available, production companies can quickly complete a well and get it into production.
The number of drilling rigs in the field dropped dramatically during 2015. Since the fall of 2016, the count has slowly risen, with a noticeable pickup in the last five months:
The number of wells awaiting completion, the ‘fracklog’, has been increasing slightly over the last year but dropped over the last two months:
In August the crude oil production in the state hit an average of 1,291,496 barrels of oil per day (bopd). As always, that is the preliminary tally, which will change when a few late reports arrive.
The record high before a several year slump was an average 1,229,572 bopd in December 2014.
In the last five months there have been three record highs with two months barely under the 12/14 record.
Here is my graph of production state-wide and Bakken only (including Sanish, Three Forks, and Bakken/Three Forks levels). Notice the steady increase over the last few months and a strong rise since winter of ‘16/’17.
For a far longer perspective, look at the average production data since 1990. I like this graph because it shows a pattern of explosive growth from about 2008 through late-2014, a drop until around the end of 2017 and a rapid growth since then. The longer view:
In May the crude oil production in the state hit an average of 1,244,629 barrels of oil per day (bopd). As always, that is the preliminary tally, which will change a bit over the next two months as a few late reports arrive.
That is 15,057 bopd higher than the previous record of 1,229,572 bopd in December 2014.
Here is my graph of production state-wide and Bakken only (including Sanish, Three Forks, and Bakken/Three Forks levels):
For a longer term perspective, here is the total monthly production since 1990: