In Oil Country, Wells Up, Production Stagnant, Workers Scarce
The number of wells producing oil is at an all-time high in North Dakota at 13,876, but this isn’t translating into higher oil output.
The latest numbers released by the state show that oil production in May was above 1 million barrels of oil per day. But it was down just slightly from the month before despite more wells operating.
At his monthly press briefing Friday, mineral resources director Lynn Helms said the reason is two-fold.
Recently, it’s older wells that have been brought back online -- they don’t produce as much oil as newer ones in the Bakken that are horizontally drilled.
But even newer wells aren’t producing oil quite as rapidly as they once did. Helms said during the rush of the boom, operators brought those wells up to capacity quickly. Today, they’re slower, as operators look to make sure infrastructure is in place to capture excess natural gas.
“In North Dakota, they have shifted to where they’re more concerned about the long-term effects on the well of flowing it too hard at the beginning,” Helms said.
Furthermore, the shortage of frack crews remains a barrier to increasing production. Helms said the inexperience on some of the existing crews is also a problem. New employees who might need more guidance wear green hard hats to identify themselves.
“There’s been a couple of situations where operators have actually let a contractor go because they had too many green hard hats on the location or they were moving way too slow because they didn’t have enough experienced hands,” he said.
He said the state currently has 21 crews operating and needs at least four more to keep up with the pace new wells are drilled.
Officials also discussed the Dakota Access Pipeline and why the price per barrel of Bakken crude is still significantly less than oil produced elsewhere in the United States. They say the pipeline is supposed to reduce transportation costs, and make Bakken crude more competitive.
But this hasn’t happened in the month since the pipeline became operational.
“I wasn’t expecting that Day 1 we were going to see the market readjust,” said Justin Kringstad with the North Dakota Pipeline Authority. “I think it is going to take 6 months maybe even a year before we settle into what that new normal is going to be with that system in service.”
He said he expects most of the oil transported through Dakota Access to end up in additional pipelines that take it to the Gulf of Mexico.