Oil and natural gas production from North Dakota's Bakken play reached new record highs in April, the North Dakota Industrial Commission's (NDIC) Department of Mineral Resources reported Monday.
According to preliminary estimates, oil production in April 2013 grew 1.3 percent to 793,249 barrels of oil per day (bopd) from 782,999 bopd in March. While the number of well completions dropped by 28 to 119, well completions remained above the threshold needed to maintain production; as a result, the oil production rate rose. At the end of April, approximately 490 wells were waiting on completion services, an increase of 50.
Gas production rose 1.7 percent from 834,637 thousand cubic feet per day (Mcf/d) in March to 860,398 Mcf/d in April. The rise in gas production is consistent with a Bentek Energy study showing that gas to oil ratios increase as wells ago. However, North Dakota shallow gas exploration is not economic at near-term gas prices, and while U.S. gas storage is now 2.4 percent lower than the five-year average, lower prices are anticipated for the foreseeable future.
The number of wells producing in the Bakken also reached a new record high of 8,758, up from 8,639 in March, the Department of Mineral Resources reported.
The number of drilling permits and rig count in the play were down from all-time highs, however. In May, 211 drilling permits were issued, down from the record of 370 in October 2012. Drilling permit activity was down slightly in April due to sufficient permit inventory to accommodate multi-well pads, the inability to construct locations during load restrictions, and the time required to deal with federal hydraulic fracturing rules if necessary.
The Bakken rig count as of Monday stands at 184, down from the all-time high of 218 set May 29, 2012. The rig count in March and April was 186; in May, the rig count was 187. More than 95 percent of drilling still targets the Bakken and Three Forks formations.
Leasing activity in the state is very slow, mostly renewals and top leases in the Bakken-Three Forks area, according to the Department of Mineral Resources.
North Dakota operators faced difficulties with weather this spring. April 2013 was the coldest month on record with over 80 percent of state highways blocked in mid-April by heavy snow, and May 2013 was the wettest on record, said NDIC Department of Mineral Resources Director Lynn Helms in a statement.
North Dakota's Bakken play has played a significant role in reversing the decline seen in U.S. oil production, which could reach approximately 10 million barrels of oil per day between 2020 and 2040, the U.S. Energy Information Administration reported on June 14.
However, uncertainty surrounding federal policies on taxation and hydraulic fracturing regulation continue to make investors nervous, said NDIC Department of Mineral Resources Director Lynn Helms in a statement.
"Pressure on the federal budget has led to a budget proposal that eliminates deductions for intangible drilling costs and the depletion allowance."
Helms urged readers to submit comments to the Bureau of Land Management regarding a draft of regulations for hydraulic fracturing on federal lands. A new proposed rule was published May 24, and comments are now being accepted through Aug. 23.