There’s a new normal for oil production in the state, and it looks to be at a million barrels a day. The information was part of the state’s monthly oil production report, which showed a 1.4 percent increase in July over June numbers to an average of about 1.05 million barrels per day.
The increase equates to about 15,000 barrels a day of oil. Natural gas had about the same percentage increase, which is about 25 million cubic feet per day.
“We’d talked in earlier webinars and said there was a good possibility of dropping below a million barrels a day late this year or early next year,” Lynn Helms, Department of Mineral Resources director said. “But with the oil price where it is and the rig count where it is and the number of frack crews where they are, we can be comfortable staying above that million barrels a day. That’s the new normal. It’s a soft landing.”
Flaring has remained at 12 percent, despite the increased gas production. The state also set a new record for number of oil and gas wells in production at 13,981. Production is between 5 and 6 percent above the projections used for state revenue forecasts, Helms said. That is offset, however, by price projections remaining about 9 percent below estimates.
“The implications are good around the state,” Helms said. “The revenue we forecast should be coming.”
There will be discussions next week, Helms said, to dig into the numbers as to how well the revenue forecast is holding up.
Helms is expecting prices will improve by the end of the year or early next, all depending, of course, on things that are happening on the world stage. In particular, what OPEC countries decide to do when they meet in November, when they plan to talk about extending production cuts. They are leaning toward keeping production cuts until the middle of next year, Helms said.
“If they do that, they should be able to bring production and demand into balance,” he said.
That’s going to push prices to the $50 West Texas Intermediate number that the Bakken’s producers have suggested is their magic number for increasing oil and gas activity. That, in turn, will help shake loose some of the state’s non-completed wells, which are hovering around 889, an increase of 34 over June numbers.
The state now has just enough hydraulic fracturing crews to keep up with its 56 rigs, so the non-completed well numbers haven’t budged much.
At $50 to $60 West Texas Intermediate, however, Helms said he would expect companies to add as many as six hydraulic fracturing crews to the current 25, and whittle down the number of uncompleted wells substantially.
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