(Adds details from state oil regulator)
By Ernest Scheyder
Jan 13 North Dakota's oil production will likely
fall below 1 million barrels per day by the end of January due
to harsh winter weather and low oil prices, state regulators
said on Friday.
Crossing that threshold would be a psychological blow to the
second-largest crude producing U.S. state, which has been
hammered hard by a two-year oil price war with OPEC and has seen
its fortunes wane due to high operating costs.
The state's Bakken oil formation has higher operating
expenses than parts of Texas, for instance, due to its
remoteness and lack of physical infrastructure.
North Dakota also must contend with winter blizzards that
southern oil-producing states lack, further threatening output.
Already this winter, North Dakota has had three major blizzards,
a sharp increase from recent years.
North Dakota pumped 1,033,693 barrels per day (bpd) in
November, down from 1,043,693 bpd in October, according to data
from the North Dakota Department of Mineral Resources, which
reports on a two-month lag.
The drop reflects a broader trend downward throughout much
of 2016. The average price the state's oil producers received
for their crude fell 12 percent in November to $34.58 per
"There is still a likelihood that production will fall below
1 million barrels per day by year's end, if not in January,"
Lynn Helms, head of the DMR, said on a Friday conference call
with reporters. "That's just right on the long-term trend. It's
really not a surprise."
Oil companies applied for six fewer well permits in November
"That's kind of a leading indicator," Helms said. "That's
the number that feeds right into the number of drilling rigs."
The number of producing wells hit an all-time high of 13,517
in November as Hess Corp, Whiting Petroleum Corp
and other large producers in the state exploited their best
acreage to maintain cash flow, Helms said. Parts of the core of
the Bakken can be profitable below current oil prices.
"Those are the best assets they have, across their
corporations," Helms said.
Others with weaker acreage, though, left the state entirely,
Helms said, noting recent land sales by SM Energy to
leave North Dakota for Texas.
Natural gas production rose about 3 percent to 1.8 million
cubic feet per day, an all-time high as the state's oil
producers continue to improve their gas collection network.
(Reporting by Ernest Scheyder; Editing by Bill Trott and David