Oil production steady in May, but transportation woes persist
BISMARCK — Oil production in North Dakota held steady this spring, and state officials say they expect challenges related to the transportation of both oil and natural gas to persist.
May’s numbers — the latest available — show that North Dakota wells produced 1.39 million barrels of crude per day, just 800 per day more than in April. Natural gas production dropped slightly to 2.82 billion cubic feet per day.
Department of Mineral Resources Director Lynn Helms called the flat numbers “a little bit of a head scratcher,” given that the number of active wells in North Dakota reached a record 15,698 in May. That represents a 195-well jump over the previous month.
Helms attributed the disconnect to what’s happening with the state’s older, shallow wells. They produce little oil, many around 25 barrels per day.
Those wells tend to be profitable when weather conditions are ideal, like in the spring and summer, Helms said.
“If we get a big winter storm that snows them in, the most economic thing to do is shut them in until spring,” he said. “Just expending the money to plow the snow and truck the oil would lose money on those wells.”
Many of the wells that were temporarily shut off over winter have now come back online.
Despite little change in May, North Dakota’s oil production is near the record set in January. The high level is creating some transportation headaches.
The state set a record in May for the volume of gas captured from its wells, but it’s still falling short of its current 88% goal. Statewide, companies are flaring off 19% of all gas produced, higher than the 12% target.
Helms said work is underway on a number of facilities to capture more of that gas, including several processing plants and Oneok’s Elk Creek Pipeline, which will carry natural gas liquids from eastern Montana to Kansas.
Operations at processing plants depend on moving those natural gas liquids, such as propane, butane and pentane, out of state. The demand is so high to transport those liquids that the oil and gas industry is turning to trucks and rail to get those products to market, Helms said.
As new facilities come online around the end of the year, Helms said, they will help bring the industry back into compliance with its flaring targets. He said he expects the state to meet its gas capture goals through mid-2022, at which point the industry will likely need more gas-capturing options.
“That’s not a lot of breathing room,” he said, adding that for companies to have new facilities in place by 2022, they need to begin planning now to have adequate time to secure funding and for construction.
He said he anticipates more announcements of new projects this fall.
High oil production also has contributed to a slight uptick in transporting crude by rail out of North Dakota this year.
State Pipeline Authority Director Justin Kringstad said 300,000 barrels per day were carried by trains in May, continuing an upward trend that began around the start of 2019. About two-thirds goes to the Pacific Northwest, with the rest to the East Coast and Gulf Coast states.
Any increases in North Dakota’s oil production likely will result in more train traffic, he said.
Several projects are underway to move more Bakken crude by pipeline, including a proposal to nearly double the capacity of the Dakota Access Pipeline to 1.1 million barrels per day.