A cold-weather slowdown in North Dakota oil production is expected, but it didn’t start in October.
Both oil and natural gas production set records again in October, North Dakota officials said Friday, although the growth was slower than in the summer months.
Crude production was 1.39 million barrels a day in October, up from 1.36 million in September.
While the number of wells and rigs both have risen some, Lynn Helms, director of North Dakota’s Department of Mineral Resources, said he still believes producers will pull back over the winter months because of economics.
First, producers did not store enough natural gas over the summer to meet demand in November because of earlier cold weather this year, he said. Now the storage needs are where they should be.
Second, the industry is “really getting mixed signals” on oil prices, which continue to fall, he said. The West Texas Intermediate (WTI) price, standard for U.S. measures of the industry, has fallen from a four-year high in October at about $63 to about $51 to $52 this month.
OPEC has agreed to cut back production to help alleviate some of the oversupply in the market. The province of Alberta in Canada also has limited some production because the Canadian oil price, like that in North Dakota’s Bakken, is much lower than the WTI.
But concerns about trade with China and other world economic issues continue to affect the prices. “The bulls and bears are duking it out in the oil markets,” Helms said.
As a result, Helms predicted that producers will pull back during the winter weather due to “pressure from gas capture, workforce [shortages], competition and choice,” he said. Producers have predicted less growth until April or May.