Oil & Gas News

North Dakota’s status as nation’s 2nd-biggest oil producer in jeopardy

North Dakota

By: Amy R. Sisk – The Bismark Tribune – North Dakota has ranked as the nation’s second-biggest oil producer for nine years, but it’s on the verge of losing that status as oil production soars in New Mexico.

By one account, North Dakota has already fallen into third place.

“It’s a horse race,” said Lynn Helms, North Dakota’s mineral resources director.

Texas continues to lead the nation in oil production. The Permian Basin spans parts of New Mexico and Texas, and it’s arguably the biggest competition for North Dakota’s Bakken oil patch. The southern oil-producing region is situated closer to major refineries and export terminals than the Bakken, and it attracts significant drilling and investment within the oil and gas industry.

The U.S. Energy Information Administration on Monday reported that New Mexico produced 1.16 million barrels of oil per day in March, the most recent month for which data is available from all states. North Dakota’s daily oil output that month was 1.11 million barrels per day, according to data from the state Oil and Gas Division.

But the figure reported by the federal government for New Mexico differs from what that state’s own regulators say. A state agency there put New Mexico’s output at 1.05 million barrels per day.

It’s unclear what accounts for the discrepancy. North Dakota officials say they believe the federal government takes into account estimates in its numbers. Either way, the two states’ oil outputs are neck and neck.

“At the rate that they’re growing production, they’re going to pass us unless our pace picks up,” Helms said.

A state’s high ranking gives it bragging rights, but its position also holds other implications. Rankings can affect an oil company’s ability to find investors to fund a project in a state, Helms said. And North Dakota’s ranking matters when the state seeks to “flex its muscle” with federal agencies on issues such as methane emissions rules and oil leasing on public lands, he said.

North Dakota became the nation’s second-biggest oil producer early on in the Bakken oil boom as horizontal drilling and fracking technology sent North Dakota’s oil production skyrocketing. The state surpassed Alaska to take the spot in 2012.

North Dakota Data

Oil and gas production information tends to lag several months, and North Dakota’s Oil and Gas Division released figures for April oil production on Monday. The state’s daily oil output grew 1.1% over March to 1.12 million barrels. A record 16,374 oil wells are active in the state.

The number of wells that have been drilled but not yet fracked grew, and none of those wells are pumping oil yet. Fracking involves injecting water, sand and chemicals down a well at a high pressure to crack open rock and release oil, a necessary step before a Bakken well can start producing oil. Helms said more fracking could occur as spring road restrictions are lifted, potentially boosting the state’s oil production.

North Dakota’s gas production grew 3.1% in April. The state is the nation’s 12th-biggest gas producer.

The state aims to capture gas produced alongside oil at wells to prevent it from being wastefully burned off. With 93% of gas produced statewide captured in April, North Dakota met its target of capturing at least 91%.

Gas produced on the Fort Berthold Indian Reservation fell just outside the target at 90%.

The state will need more natural gas processing facilities if it’s to continue to meet its flaring target in future years, North Dakota Pipeline Authority Director Justin Kringstad said. Several companies are looking at expanding existing processing plants or building new ones.

WBI Energy recently received a key federal permit for a pipeline that would begin near Tioga and end near Watford City. The project would help bring more gas processing to the area north of Lake Sakakawea, a region in need of more of that sort of infrastructure, Kringstad said.

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