Last week state energy officials announced that North Dakota crude production in November rose slightly, despite low oil prices.
However, as reported by The Wall Street Journal (WSJ), North Dakota Department of Mineral Resources Director Lynn Helms warned oil and gas companies that current production rates are not sustainable at current prices. “We need $50 oil to keep production flat. We cannot sustain production at sub-$30 prices,” Helms said at a news conference.
November production rates, the latest data available, increased by 0.4 percent, or 1.17 million barrels per day, compared to October figures. The state’s natural gas production rate, meanwhile, increased 0.67 percent from the previous month and reached a record high of 1.67 billion cubic feet of gas per day, as reported by the North Dakota DMR.
According to state data, North Dakota sweet crude is currently priced at around $20 per barrel after accounting for its discounted trade. There are currently 41 drilling rigs operating in the state compared to the 200 operating this same time in 2012. The WSJ reports that in a research note, RBC Capital Markets said, “In our view, the slight production increase is incrementally bearish, as it showcases operators’ ability to maintain production volumes with limited monthly completions.”
Helms added that if benchmark West Texas Intermediate prices continue to hover around the $30 per barrel mark, Bakken shale output will likely decline. Oil production in North Dakota peaked at 1.23 million barrels per day in December 2014.