Blackouts cut North Dakota oil production

North Dakota's oil and gas output fell more than expected in February after electricity blackouts — courtesy of a big cold snap — temporarily shut down production.

The nation's second-largest oil-producing state, North Dakota churned out 1.08 million barrels of crude per day in February, down nearly 6% from the previous month, according to state data released Thursday. Natural gas production fell 5% from January.

"All in all, it was not a great month, not terrible, but not good," said Lynn Helms, director of North Dakota's Mineral Resources Department.

The winter storm that paralyzed Texas and other south-central states caused rolling blackouts within the Southwest Power Pool, a regional grid extending north from the Texas Panhandle to North Dakota.

The Western Area Power Administration, which is part of the Southwest Power Pool, instituted blackouts for two days that affected three North Dakota oil counties. Some producers were left without electricity for their operations.

Before the blackout, Helms said he had been expecting a 2 to 3% decline in oil production.

"It doubled what we had anticipated in terms of production decline," he said.

North Dakota is seeing some good signs, though, Helms said.

The drilling-rig count, an indicator of new production, currently stands at 17, up from 15 in February and 12 in January.

"It is encouraging to see the rig count is increasing a little bit," Helms said.

Also, oil prices have risen since the beginning of 2021. West Texas Intermediate — the benchmark U.S. crude price — climbed from an average of $52 a barrel in January to $57 in February and stood at $63 Thursday.

But the fate of the Dakota Access pipeline, which transports about 40% of North Dakota's oil, is uncertain.

Last year, U.S. District Judge James Boasberg in Washington, D.C., threw out Dakota Access' federal permit, saying the Army Corps of Engineers failed to do a thorough environmental review of the project.

As part of the decision, Boasberg ordered the pipeline closed until the review was done. That provision was temporarily reversed on appeal.

But the matter is back before Boasberg next week, and he could order again that Dakota Access be shut down while the environmental review is being conducted.

Mike Hughlett • 612-673-7003