(Reuters) - North Dakota’s oil output fell nearly 3 percent in December, the biggest monthly drop in almost a year, the first real sign that the deepening rout in prices took an ever bigger toll on producers in the birthplace of the U.S. shale boom.
State regulators said the data showed producers are not expecting prices to rise any time soon, marking a significant shift for operators in the No. 2 U.S. oil producing state.
“Producers anticipate prices staying much lower for longer than what was expected even six months ago,” said Lynn Helms, director of North Dakota’s Department of Mineral Resources (DMR).
“What we’re seeing now is the first real production decline.”
The state produced 1,152,280 barrels of oil per day (bpd) in December, its first drop in three months and down from 1,181,787 in November, DMR data showed.
That’s the biggest monthly drop since January 2015 and one of the largest since the oil shale revolution started in 2010. Prices have plunged more than 70 percent since mid-2014.
Continental Resources Inc and Hess Corp, North Dakota’s second- and third-largest oil producers respectively, each slashed their 2016 budgets last month for the second straight year.
Continental, led by billionaire wildcatter Harold Hamm, said it would pump 10 percent less oil this year as it can no longer afford to extract more crude at low prices.
The drop was roughly in line with earlier forecasts from the U.S. government. In November, the U.S. Energy Information Administration said Bakken oil production was expected to fall 27,000 barrels per day to 1.11 million bpd in December. A month later, it revised that output drop to 23,000 bpd.
For December, North Dakota’s natural gas production fell about 0.3 percent to 1.7 million cubic feet per day.
The number of producing oil wells rose by 19 to 13,119, though it was slightly below the all-time high of 13,190.
North Dakota oil producers have sharply curtailed requests to drill new wells, with only 78 permitted in January compared to 125 in November.
“It’s been almost seven years since we’ve seen numbers that low in the permitting category,” Helms said.
Only 41 drilling rigs are operating in the state as of Wednesday, the lowest level since July 2009. Helms said that number likely will fall to 29 by summer without a price recovery.
Reporting by Ernest Scheyder; Additional reporting by Catherine Ngai in New York; Editing by Alden Bentley and David Gregorio