Bad weather left the state just shy of the million-barrel-per-day mark, but April looks promising.
Bad weather once again cheated North Dakota out of its first million-barrel-per-day month of oil production, state officials said Tuesday.
The state came very close in March, producing a record-high 977,051 barrels of crude a day. That was up from 952,055 barrels per day in February. But for the third straight month, North Dakota officials blamed severe winter weather for cutting into production.
“I wouldn’t be surprised to see April squeak past it,” Department of Mineral Resources Director Lynn Helms said of the elusive, symbolic benchmark.
In addition to subzero temperatures that began March, the state saw 8 inches of snow on the last day of the month. In between came 12 days of winds blowing 30-35 miles per hour, limiting completion of new oil wells.
The state still awaits completion of more than 600 wells. “In like a lion and out like a lion makes oil and gas work difficult,” Helms said.
Still, Helms expects hundreds of drilling rigs operating on the state’s Bakken formation to be extracting 1.5 million barrels of crude per day by year’s end. That compares with only tens of thousands of barrels per day produced in 2003.
North Dakota’s oil boom has rocketed the state to economic prosperity. In March, the state boasted the country’s lowest unemployment rate of 2.6 percent.
North Dakota now ranks second only to Texas in oil production. Add in a massive natural gas industry that in March extracted a record-setting 1,086,189 cubic feet of gas per day, and you have an equation for a growing financial windfall.
“I would say this trend is very likely to continue for the next several years,” said Mark Hanson, who analyzes U.S. oil and gas prospects for Morningstar.
The million-barrel-a-day standard will be “kind of cool to say” when it inevitably comes, Hanson noted. But “the speed with which they’ve achieved it is phenomenal.”
A new report from the U.S. Energy Information Administration shows new oil rigs in North Dakota producing on average 500 barrels per day. That’s more per rig than in Texas. But Texas, with its vast expanse of oil fields, still leads in overall production. U.S. oil and gas production is up overall, reducing the need to import fossil fuels.
While financial analysts see very little downside to the North Dakota oil boom, it is taking a toll on some other sectors, especially agriculture, which must compete for space in shipping cars on already overloaded rails. With roughly 70 percent of the oil from North Dakota exported by train, growth in production likely portends more shipping problems for an already overloaded rail system.
With oil shipments taking up more and more of the shipping capacity, farmers in the Upper Midwest have struggled to get fertilizer delivered for the current planting season and in some cases battled to get their crops to market.
Tuesday’s announcement of a record-setting March for oil and gas production in North Dakota came the day after a letter complaining about “poor” rail service in the Upper Midwest arrived at the federal Surface Transportation Board in Washington. The letter came from four U.S. senators, including Minnesota’s Al Franken and Amy Klobuchar, as well as North Dakota’s Heidi Heitkamp and South Dakota’s Tim Johnson.
All Democrats, the four called for the use of “whatever authority necessary” to improve rail shipments of agricultural products and manufactured goods, as well as fossil fuels.
Also lingering are safety and environmental concerns.
On Monday, North Dakota authorities announced an oil spill at a well near Tioga that required monitoring by state and local emergency and health personnel. The U.S. Environmental Protection Agency and Bureau of Land Management each are considering new rules for hydraulic fracturing used in extraction.
Helms discussed the state’s intention to withhold operating permits for gas wells that don’t present plans to capture more gas and reduce the amount they must burn off, releasing greenhouse gases into the atmosphere.