North Dakota’s oil production rose nicely again in November, and, with petroleum prices rising, monthly output should set records in 2018, the state’s top oil and gas official said Tuesday.
“We’re pretty optimistic,” said Lynn Helms, director of North Dakota’s Department of Mineral Resources. “Everything points to more (oil) rigs, more frack crews and more activity in North Dakota.”
North Dakota, the nation’s second largest oil-producing state, pumped out 1.19 million barrels per day in November, up 1 percent from October and the highest monthly output since July 2015. The state’s all-time production high was 1.23 million barrels per day in December 2014.
“We are closing in on that 1.2 million (barrel per day) number, which is a pretty important number,” Helms said. “Sometime in the first half of this year, we should break the record.”
November was also a good month for North Dakota’s natural gas production. It rose 1.4 percent from October, hitting a record high of 2.1 million MCF per day. (An MCF is a thousand cubic feet of gas.)
The U.S. oil industry is expected to post a record year in 2018. Crude oil production is forecast to average 10.3 million barrels per day, surpassing the previous record of 9.6 million barrels per day set in 1970, according to a report last week from the U.S. Energy Information Administration (EIA).
Oil prices are currently near a three-year high, with the U.S. benchmark crude price of West Texas Intermediate (WTI) closing just short of $64 per barrel Tuesday.
Prices have risen due to a relatively hot global economy — which has increased oil demand — coupled with supply curtailments by OPEC and Russia. The oil-producing countries agreed in November to extend production limits originally set in November 2016. The supply caps, aimed at reducing global oil inventories, are expected to run through 2018.
With higher prices, the current drilling rig count in North Dakota has risen back to its October level of 56, after falling to 52 in December. A rising rig count indicates operators are drilling more new wells.
The rig count in North Dakota was 38 one year ago after falling to a low of 27 in May 2016. If oil prices stay over $55 for the next 90 days, operators are expected to add five to 10 more rigs in the second and third quarters of 2018, Helms wrote in a monthly report released Tuesday.
Helms was asked during a webinar for reporters Tuesday whether he thought North Dakota was embarking on a second oil boom, or getting a “second wind.”
The latter, he answered. “We don’t envision anything happening here like in 2012 and 2013.”
Back then, oil prices soared to a range of $90 to $100 per barrel. They began to collapse in 2014’s fourth quarter, hitting a nadir of around $30 a barrel in February 2016.