Natural gas production hits new record in July; oil production up 1% - Bismarck Tribune

Natural gas production hits new record in July; oil production up 1%

North Dakota oil production rose in July to a level not seen in two years, while natural gas production set a monthly record, the state's top oil regulator said Thursday.

The state produced an average of nearly 1.18 million barrels per day in July, a 1% rise from June.

Natural gas production rose by 1% in July to more than 3.28 billion cubic feet per day, making for a total of 101.98 billion cubic feet over the month.

“The state of North Dakota has never before produced over 100 billion cubic feet of natural gas in a month,” State Mineral Resources Director Lynn Helms said Thursday.

The state's figures lag two months as officials collect and analyze data from energy companies.

West Texas Intermediate crude, the U.S. oil pricing benchmark, was trading at $88.52 per barrel on Thursday, compared with an average of $76.03 in July and $70.27 in June. The highest price on record was $134 in June 2008.

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Oil prices are projected to continue to rise following announcements by Saudi Arabia and Russia that they both plan to cut production through the end of the year.

The state's drilling rig count as of Thursday was 33, down from 37 in August. Rig count statewide is expected to gradually rise to the mid-forties over the next two years, according to Mineral Resources.

Helms attributed the low rig count to workforce shortages.

Oil and gas companies in North Dakota are expected to see a boost in employment numbers as the state continues to receive Ukrainian citizens who will fill oilfield positions as part of the Bakken Global Recruitment of Oilfield Workers program.

Helms said the first group of Ukrainians has started working and another group is expected soon.

“My understanding from talking with the folks in the program is there’s about 500 people waiting in Ukraine that are signed up and ready to come as we get the process up to speed,” he said.

Corporate mergers and acquisitions have played a role in the low rig counts as well. Colorado-based Ovintiv’s sale of its Bakken assets to Grayson Mill of Houston earlier this year was causing some disruptions, Helms said.

The rig count was still high enough to maintain production Helms added, but not enough to “create strong growth of more than 1 or 2% (annually).”

Well completion, which is the process needed to prepare a well for production, rose to 91 in August.

Eighty-seven wells were permitted in August. The state now has 18,101 active wells.

Producers had a 96% natural gas capture rate across the state in August, up from 94% in July. The state target of 91% aims to cut into the wasteful flaring of natural gas due to a lack of pipeline infrastructure and processing capacity. Gas capture on the Fort Berthold Reservation remained at 98%.

­­­­­­Helms said there is a strong push to expand oil and gas production beyond core areas such as Fort Berthold.

As production moves outward, infrastructure will need to follow in order to keep flaring down, he said.

The North Dakota Petroleum Council, a trade group that represents over 550 oil and gas companies, also praised the gas capture and production records in a statement Thursday.

“Reaching this level of gas capture is truly impressive, and even more so considering the infrastructure capacity constraints that were overcome to get here,” said Brady Pelton, the group's vice president.

Reach Joey Harris at 701-250-8252 or joseph.harris@bismarcktribune.com.