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UPDATE 2-North Dakota oil output tops 800,000 bpd in May
July 15, 2013 / 4:22 PM / in 4 years

UPDATE 2-North Dakota oil output tops 800,000 bpd in May

(Adds details and comments on expected production increase Jun-Aug)

July 15 (Reuters) - Oil production in North Dakota topped 800,000 barrels per day for the first time ever in May, the state regulator said on Monday, adding that output this summer will exceed earlier expectations as firms clear a backlog of wells waiting to be fracked.

The state’s Department of Mineral Resources said preliminary output figures in May rose 2 percent - or 16,277 barrels per day (bpd) - hitting a record 810,129 bpd even as record rainfall for the month impeded new drilling.

Lynn Helms, director of the North Dakota Department of Mineral Resources, said production increases in the third quarter are expected to be even higher, adding at least another 60,000 bpd of production as firms shift their focus to completing wells that have already been drilled.

“We think that June, July and August production increases will definitely exceed the 16,000 barrel per day increase we saw in May,” Helms said in an online press conference late on Monday.

“We’re anticipating production increases of 20,000 bpd a month or more. We expect production will be higher than we anticipated for the revenue forecast.”

The latest production numbers and forecast imply production in North Dakota could be above 870,000 bpd by the end of August, well above an estimate by the regulator in April that said production wouldn’t approach those levels until early next year.

Oil production in North Dakota has soared from around 100,000 bpd in 2008 as developments in horizontal drilling and hydraulic fracturing - commonly referred to as “fracking” - have allowed producers to tap the giant Bakken and Three Forks shale formations, transforming the state into the second largest oil producing state after Texas.

There are now a record 8,915 producing wells in North Dakota, the Mineral Resources Department said, though the number of rigs drilling new wells in May increased by only one from April to 187. That was down 14 percent from the record level of 218 hit in the same month last year.

FRACKING DELAYS

Well completions, whereby wells undergo hydraulic fracturing and are made ready to pump oil, rose by 10 in the month to 143, but heavy rains led to delays in delivering frack sand and other materials, Helms said.

“The net result is that we have increased the number of wells waiting to be fracked,” Helms said.

“There is some refocusing of companies between drilling personal and completion personal.”

The regulator said “load restrictions” had remained in place for a record amount of time in May, which was the wettest in the state on record.

The average amount of time from initially drilling a well to its completion has risen to 92 days, the regulator said, but that is expected to fall with better weather in the summer months.

“We estimate that at the end of May there were about 500 wells waiting on completion services, an increase of 10,” the regulator said. (Reporting by David Sheppard; Editing by Bob Burgdorfer and Andrew Hay)

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