BISMARCK — North Dakota's oil output took a 4% dip in January, and even though prices have been gradually climbing in the months since, many producers are choosing moderation for the time being.
A small drop in production at the beginning of this year was expected, the state’s top oil regulator Lynn Helms said Thursday, March 11, but the hit was larger than officials had predicted due to powerful winds that interrupted production in the Bakken in January.
And even though U.S. oil prices have been inching upward again — climbing to $66 a barrel on Thursday, an increase of close to $20 over the last three months — Helms said North Dakota producers aren’t planning to bring more drilling rigs online anytime this year.
That’s largely because most companies aren’t expecting these favorable prices to hold. The industry sees the recent windfall as more likely “a short-term peak,” Helms said, expecting that prices will dwindle into the upper $50s a barrel over the next year or two. While producers are likely to scale up production some by completing unfinished wells and increasing output from existing wells, the price forecasts aren't enough for companies to drill new wells anytime soon.
There are currently 15 drilling rigs operating in the state, up by two since the end of last year.
Helms also attributed a recent bump in oil prices to a surprise move by Saudi Arabia and other OPEC nations, the powerful international alliance of oil producers, who decided in a meeting last week not to substantially increase their production, a move that many customers felt in an increase at the fuel pumps.
North Dakota producers are also bracing for potentially drastic news on operations of the Dakota Access Pipeline next month, in a development that could throw a wrench into the recent upward trajectory of Bakken oil prices.
At an April 9 court hearing, President Joe Biden's climate-focused administration is slated to present its plans for the pipeline, which is lacking a key legal permit according to two federal courts, before Judge James Boasberg of the U.S. District Court for the District of Columbia. Boasberg ordered a shutdown of Dakota Access last summer, and several of Biden's early moves against the oil industry have prompted widespread speculation that he could also call for a shutdown.
“We’ll all be watching,” Helms said. “That’s going to be a very, very significant event for the price of oil in North Dakota.”
Oil production out of North Dakota averaged about 1.1 million barrels a day in January, the latest industry figures available, a decrease of about 45,000 barrels a day from the month before.
Producers burned off about 6% of the natural gas released during the oil production process, clearing the state’s goal to limit flaring to below 10%. Flaring natural gas releases methane, a potent greenhouse gas that contributes to global warming.
Readers can reach Forum News Service reporter Adam Willis, a Report for America corps member, at email@example.com.