North Dakota's oil production was essentially flat in October, and it's not likely to appreciably improve until well into next year or even 2022, the state's mineral resources director said.
North Dakota, the nation's second-largest oil-producing state after Texas, pumped 1.22 million barrels of crude per day in October, down 236 barrels from the previous month, the state said Monday. Natural gas production, however, rose 2% from September to October.
After the coronavirus pandemic decimated global oil demand, North Dakota's crude production fell to a seven-year low in May of only of 858,400 barrels per day. Output then rallied over the summer as oil prices recovered a bit and shut-in wells were reopened.
However, "that surge in July, August and September is over," Lynn Helms, head of the North Dakota Mineral Resources Department, told reporters.
The benchmark U.S. crude oil price — West Texas Intermediate (WTI) — has climbed over the past month from $41 to $47 per barrel, about where it was in early March.
But Helms said WTI needs to get to at least $55 a barrel before oil operators in North Dakota start looking to drill new wells. Such new business is needed to boost total state oil output as production from existing wells naturally declines.
"As we go into next year, I don't think it looks promising in terms of growth," he said. The pandemic's effects on demand and depression of crude prices might not correct itself until late 2021 or 2022.
Helms also noted that the oil industry is increasingly challenged by "ESG" — environmental, social, and corporate governance — investors. ESG investors' influence is growing, Helms said. And they aren't partial to the carbon-intensive oil industry.
As for 2020, "all and all, it was a terrible year for the industry," Helms said.
Still, during his 40 years in the state's oil patch, he said two other oil busts — one in 1985 and 1986, the other in 1999 and 2000 — were worse.
Mike Hughlett • 612-673-7003
