North Dakota’s oil production dipped 1 percent in September, the second consecutive month the state’s output has fallen below the 1 million barrel-per-day mark.
Globally, low oil prices persist, a condition that won’t necessarily be abated by President-elect Donald Trump, a big fossil fuel fan, said Lynn Helms, director of North Dakota’s Department of Mineral Resources.
Trump has talked about making it easier to drill for oil and transport the stuff — bullish themes for oil producers. But the world already is stuck in an oil glut, so more production likely will keep prices in the doldrums longer, Helms said Wednesday.
However, Trump’s ascension “will lead to a lot less uncertainty” for the oil industry over regulation, transportation costs and hydraulic fracturing, he said.
North Dakota, the nation’s second largest producing oil state, churned out 972,000 barrels per day in September, down from 982,000 barrels the previous month, according to data released Wednesday by the North Dakota Department of Mineral Resources.
The decline was expected. Still, September marked the lowest monthly per barrel production in North Dakota since February 2014. The state’s peak production was 1.23 million barrels per day in December 2014.
The price of West Texas Intermediate crude — a key benchmark — dropped from a mid-2014 peak of more than $100 a barrel to about $30 per barrel, before settling into a $40 to $50 trading band since May.
Sustained oil prices need to be in the $50 to $60 per barrel range to spark more activity in North Dakota.
OPEC nations are pumping crude in high gear, and markets appear pessimistic that the global cartel will stick to any proposed production cuts. “We just have to live with this kind of production,” Helms said.
In his monthly comments to the press, Helms was peppered with questions about possible effects of a Trump administration on the state’s oil business.
While the production effect is murky, the oil transportation effect is clearer, he said.
With a Trump presidency, the controversial Dakota Access pipeline is more likely to be completed, analysts say.
The massive pipeline, which crosses North Dakota diagonally, is almost complete now. But it has been stopped in its tracks by American Indian-led protests over potential water contamination and the disruption of sacred cultural sites.
Because pipelines move oil more cheaply than railroads, oil producers are looking at transport costs of $6 to $10 per barrel with the completion of Dakota Access, Helms said. Without the pipeline, that number would be $12 to $25 per barrel.
One small bright spot for North Dakota’s oil industry: The state’s rig count is up a bit. There are 38 exploration rigs operating now, up from 33 in October and 34 and 32, respectively, in September and August.
The all-time high was 218 in May 2012.
The increase in rigs in North Dakota has been mirrored elsewhere in the U.S. oil patch. Still, Helms said he doesn’t foresee oil prices at high enough levels to justify much of an increase in drilling until late 2018 or 2019.