Oil production continues to drop in North Dakota

North Dakota's oil production dropped 2 percent from May to June as low oil prices continued to take their toll. And there's no quick turnaround on the horizon.

North Dakota, the nation's second-largest oil producing state, pumped out 1.03 million barrels in June, down from 1.05 million the month before, according to state data released Friday. Daily production in North Dakota hit its lowest point in 26 months, and is well off the all-time high of 1.23 million barrels a day in December 2014.

West Texas Intermediate Crude, the benchmark U.S. oil price, closed at $44.49 a barrel Friday, a three-week high. But that's below the $50 to $60 mark needed to spark more activity on the Bakken range. And a rally earlier this year — which saw WTI rise from a decade low of around $35 to over $50 in June — fizzled.

The hydraulic fracturing process used to extract oil in North Dakota is more ­expensive than traditional oil drilling, making the state more vulnerable to lower oil prices.

The drill rig count in North Dakota stands at 34, up by three from July but well below the peak of 218 in May 2012. The overall U.S. rig count has risen for seven straight weeks, according to Baker Hughes, an oil field service company.

In North Dakota, permits for drill rigs have also increased sharply in the past two months, as operators begin to position themselves for higher oil prices in 2017, according to a monthly report by Lynn Helms, head of the state's Department of Mineral Resources.

Still, oil price weakness is expected to continue into at least the third quarter and perhaps into the second quarter of 2017, Helms wrote.

Mike Hughlett • 612-673-7003