By Selam Gebrekidan
Sept 19 The number of rigs drilling for oil in
North Dakota fell to the lowest in more than a year in September
as operators sought to cut costs and increase efficiency, the
North Dakota Industrial Commission said on Wednesday.
The number of oil-focused rigs in the Midwest state dropped
to 194 this month, its lowest level since July 2011, the
commission's data showed. The current rig count is 11 percent
lower than the all-time high of 214 set in May.
The dip, along with escalating costs and regulatory
concerns, could further stall growth in the nation's largest oil
find in a generation.
"The combined effect of several factors has led to a
noticeable slowing of activity and production growth," Lynn
Helms, director of the state's Department of Mineral Resources,
said in a monthly note.
Helms, voicing concerns publicly for the first time over
slowing growth in the Bakken shale prospect, cited the lower rig
count, rapidly rising costs, and uncertainties over regulations
on the "fracking", or hydraulic fracturing, drilling technique.
North Dakota became the second-largest oil-producing state
in the country this year after output from the Bakken and Three
Forks prospects surpassed Alaskan production.
The state produced 674,000 barrels of oil a day in July, the
latest month for which data is available. About 90 percent of
this came from the Bakken and Three Forks, where a combination
of horizontal drilling and hydraulic fracturing technologies has
unlocked huge shale reserves.
However, July's output rose only marginally over June,
despite the summer's mild and drilling-friendly weather,
according to Helms.
The monthly output increase in July was the smallest since
April last year, when spring flooding had stalled production.
Helms said operators, which are eating into their capital
budgets as costs escalate, are trying to rein in expenses by
shifting to fewer and more efficient rigs and cutting costs
wherever they can.
This echoes statements from the largest operators in the
Bakken, such as Continental Resources Inc and EOG
Continental Resources raised its capital budget in August
for the second time this year as it faced higher costs in the
The pullback in the number of rigs could quickly lead to a
drop in output in the Bakken shale, where average wells deplete
at a steep clip every year.
Uncertainties over the federal government's bid to regulate
fracking centrally are affecting investment decisions in North
Dakota, Helms said.
States that sit on large shale oil and gas reserves are
sharp critics of the Obama administration's drive to regulate
fracking on federal lands. They say the move will create a
duplicate layer of oversight and stifle growth by raising costs.
North Dakota Republican Senator John Hoeven, along with
Alaska Senator Lisa Murkowski, said on Tuesday that he will
introduce a measure to "put states first in the regulation of
The measure will "ensure that states retain the right to
manage hydraulic fracturing and gives them the ability to
respond first to any violation," Hoeven said in a statement.