UPDATE 2-North Dakota oil production hits record high
By Selam Gebrekidan NEW YORK, Sept 13 (Reuters) - Oil production in North Dakota hit a new record high in July as oil companies brought more wells online once summer rains stopped, the state regulator said. Output in July jumped by 55,000 barrels per day from the month before, to just below 875,000 bpd, monthly data issued by the North Dakota Industrial Commission's Oil and Gas Division showed on Friday. Most of the new production came from the Bakken and Three Forks shale formations where drillers are using horizontal drilling and hydraulic fracturing (fracking) technologies to tap the state's massive oil resources. Companies produced slightly more than 810,000 bpd of oil from the Bakken shale in July. Output growth picks up pace every summer in North Dakota when warm weather allows for more drilling and completion work. "A lot of (fracking) crews sat idle in May and June because it was wet and they couldn't get frack sand to the wells," said Lynn Helms, director of the commission's oil and gas division. But more than a hundred wells were completed - fracked and connected to gathering lines - once the weather cleared at the end of June, he said. Still, nearly 460 wells were awaiting completion in July as companies continue to use a more efficient drilling method called pad drilling that is adding wells faster than they can be fracked. Output will continue to march higher in the coming months when these new wells are brought online, Helms noted. Some 206 new wells were drilled in July, all of which targeted the Bakken and Three Forks formations, according to the data. FLARING STILL A PROBLEM The state is struggling to control natural gas flaring as producers continue to burn off or vent the gas they find in oil wells in the absence of pipelines to bring the hydrocarbons to market. The commission has announced its plans to cut the length of time companies are allowed to flare from a well and the number of wells that do so, although it is yet to outline clear policy measures it can implement without curtailing oil output. North Dakota produced a record 9.7 billion cubic feet a day of natural gas in July but flared a quarter of that volume, the regulator's reports show. More gas was flared in July than the previous month after an older natural gas-processing plant, operated by Oneok Inc , ran into mechanical problems, Helms said. Flaring is a controversial process that critics say brings lasting damage to the environment. RAIL BLITZ About 67 percent of the oil produced in July reached its destination markets in rail tanks, the North Dakota pipeline authority said. Most of the rail shipments reach refineries on the East and West coasts, including plants in northeast Canada. But rail shipments of crude oil have gathered federal regulators' scrutiny in North Dakota after audits revealed that some cargoes were not properly labeled. The runaway train that was carrying Bakken crude when it exploded in Quebec in July was carrying oil that was not properly labeled, Canadian authorities said this week. These concerns have led to random inspections that started in August and were dubbed "Bakken Blitz" by the federal agencies heading the operation.