North Dakota oil production averaged nearly 1.19 million b/d in October, up more than 78,000 b/d from September and the highest average output since August 2015, bolstered by the OPEC supply cut agreement and global economic growth, the state Department of Mineral Resources reported Friday.
October's average output was still roughly 42,000 b/d below the all-time monthly output record set in December 2014, but was the highest month-to-month increase in state history, according to Lynn Helms, the state's top oil and gas regulator.
Statewide natural gas production averaged more than 2.06 Bcf/d, up from 1.95 Bcf/d in September and a new all-time high, the state agency said.
There were also an all-time high of 14,250 producing wells in North Dakota in October, up 51 from September, the agency said.
"Weather permitting, we may be starting to look at record numbers again before too long," Helms said Friday.
Helms said that Bakken production has been bolstered by the ongoing OPEC supply cut agreement and current global economic growth.
He said if either of those two factors were to change, such as the supply cut agreement collapsing or a decline in economic growth in Asia or Europe, Bakken output would likely decline as well.
OPEC oil output in November fell to 32.35 million b/d, its lowest in six months led by declines in eight of the 14 member countries, an S&P Global Platts survey of OPEC and oil industry officials and analysts showed Thursday.
Last week OPEC and non-OPEC countries agreed to a nine-month extension of their production cut agreement through the end of 2018, with an option to review the deal in June.
S&P Global Platts Analytics is expecting continued growth in North Dakota Williston Basin oil production, with output rising to 1.234 million b/d in 2020, and 1.308 million b/d in 2022.
Producers in the Bakken have focused on improving efficiencies and cutting costs. As a result, rigs can now drill more wells per month.
Drilling and completion costs have fallen from $8.5MM in 2013 to $6.1MM in Q3 2017, according to Platts Analytics.
This has allowed internal rates of return in the Bakken to climb to 31% in December 2017 from just 6% in early 2016.
Producers have been able to more easily reach US Gulf Coast and international buyers following the startup this summer of the 520,000 b/d Dakota Access Pipeline.
The 1,172-mile DAPL line originates in North Dakota, shipping Bakken crude to Patoka, Illinois, where it connects to the 700-mile ETCOP pipeline, bringing crude down to Nederland, Texas.
At Nederland, Energy Transfer Partners offers 26 million barrels of crude storage to facilitate exports.
In mid-October, Bakken producer Continental Resources announced its first-ever overseas sale, with just over 1 million barrels due to be shipped to China starting in November.
The DMR estimates that there were 889 wells awaiting completion at the end of October, up 36 from the end of September.
Helms said the state previously had roughly 300 wells waiting on completion, but said producers were not currently motivated to start drilling into the current inventory.
"This may be the new normal," Helms said.
There were 147 drilling permits issued in October, up from 104 in September, but well below the all-time high of 370 permits in October 2012.
The agency estimates that 119 drilling permits were issued in November.
North Dakota's rig count remained at 56 in September and October, but has since fallen to 53 as of Friday. The state's record rig count was 218 rigs in May 2012.
"Operators have shifted from running the minimum number of rigs to incremental increases and decreases as the WTI oil price moves between $45 and $60/barrel," Helms said. "If WTI drops below $45/barrel for more than 30 days rig count is expected to drop. If WTI remains above $55/barrel for more than 90 days rig count is expected to rise."
Helms said he did not expect the rig count to rise in the near term, partly due to the inability of fracking companies to hire new crews. There are currently about 30 frack crews in the Bakken, he said.
Fracking companies are "having a hard time hiring qualified applicants," Helms said. "Getting the qualified people and getting them trained has been a real struggle."
