BISMARCK — North Dakota's oil output stayed well below pre-pandemic levels in June as even the state's heavy-hitting producers struggled to keep drilling rigs running and workers on the job.
Companies operating in the state produced about 890,000 barrels of oil per day in June — a nearly 37% decrease from March levels, but a slight increase from May.
Oil producers enjoyed prices above $60 a barrel at the beginning of the year, but prices initially began to decline in late January as the coronavirus epidemic put a stranglehold on the world economy and demand for oil swiftly declined. Crude prices then took a further nosedive in early March when Saudi Arabia and Russia, two of the world’s largest producers, locked horns in a "price war." The West Texas Intermediate, a benchmark for American oil prices, now sits around $40 a barrel.
Department of Mineral Resources Director Lynn Helms said Friday, Aug. 14, that about 10,700 oil workers have been laid off, mostly in the western part of the state.
The number of drilling rigs running in North Dakota has dropped off a cliff from 52 in March to only 11 in the field right now. Helms said the rigs still running are mostly operated by big producers that are just trying to stay active so they'll have workers and equipment in place whenever oil prices recover. He also noted that uncertainty for the industry surrounding a Democratic win in November's presidential race has compelled some producers to drill on federal land while they still have approval from the White House.
Helms offered a grim outlook for North Dakota's Oil Patch, saying the earliest rigs could come back is late next year. The drilling activity that remains has receded into the "core area" of the Bakken Formation around the Fort Berthold Indian Reservation, he said.
The state will likely see a temporary jump in oil production when the July figures are released, but Helms said he wouldn't want to get people excited about an increase that will only last a few months. He characterized the likely rise as "flush production," where companies that previously shut in wells are now bringing them back online, but they won't be productive for long.
Helms did express enthusiasm over a new state program that uses more than $66 million in federal CARES Act funding to plug and reclaim wells that companies abandoned. He said the program has already put 400 people back to work, and that number will likely jump to 600 by the end of the week.
Producers burned off 11% of the natural gas released during the oil production process. The state's goal to limit flaring to 9% goes into effect at the end of October, but the state's Industrial Commission may push back the target date. Scientists say flaring natural gas releases carbon dioxide into the atmosphere, which spurs climate change.