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Bakken oil producers need $55 to keep production steady: Kemp

John Kemp is a Reuters market analyst. The views expressed are his own.

LONDON, Jan 9 – North Dakota needs an oil price of around $55 per barrel and a fleet of around 140 rigs to sustain production at the current level of 1.2 million barrels per day, the U.S. state’s chief regulator told legislators on Thursday.

Department of Mineral Resources Director Lynn Helms outlined breakeven rates for wells across the state and production projections for a range of prices in a presentation for the House Appropriations Committee of the State Legislature.

Breakeven rates for new wells, the level at which all drilling would cease, range from $29 in Dunn county and $30 in McKenzie to $36 in Williams and $41 in Mountrail. These four counties account for 90 percent of the drilling in the state.

Breakevens in counties on the periphery of the Bakken play, which have far fewer rigs, range up to $52 in Renville-Bottineau, $62 in Burke and $73 in Divide.

Related: Bakken oil prices not far from 2008-09 lows: Kemp

But Flint Hills Resources’ posted price for North Dakota crude was just $32, Helms said, compared with almost $49 per barrel for WTI. Wellhead prices, which are roughly an average of the two, are around $40 and have been falling since the start of this year.

Even before prices hit these minimum levels, drilling will slow sharply. The number of rigs operating in the state has already fallen to 165, down from 191 in October, according to the department.

If wellhead prices are around $35 per barrel, the number of rigs will fall to just 90, and production will decline to 1.03 million barrels per day (b/d) by the start of July 2015, and then dwindle to 875,000 b/d in July 2016 and 720,000 b/d in July 2017.

To keep output steady at 1.2 million b/d for the next three years, the state’s producers need a price of $55 rising closer to $65 in the longer term to support a fleet of 140-155 rigs.

Helms’ projections confirm North Dakota’s oil output will start to fall by the end of the year unless prices rise from their current very depressed level.

Wellhead prices of $40 are not sustainable in anything other than the very short term.

 

(Editing by William Hardy and Dale Hudson)

This article was from Reuters and was legally licensed through the NewsCred publisher network.

259 comments

  1. Subsidize to get the US less dependent on the overseas oil!

  2. Until the Saudis burn through a couple of trillion in reserves it’s gonna stay cheap

  3. Prices will be back up to $70-75 per barrel by March.

  4. I say scare tactic cuz unemployment is down in a lot of other states!!

  5. This down turn will last around 15 Months. Saudis are not going to stop production neither is Opec. They are trying to make the US, Russia and Iran feel the pain.

  6. Tim Tole why do u think it will hit 75 by March

  7. give the poor people some money back if they keep proces down people will buy more gas in the long run an the co s still make a lot of money

    • How much gas can you buy if you don’t have a job?? See all of us in the oilfield that depends on the price being up so we can work like the price of gas at 3.00 you just budget for it been doing it for years now. I’m sure you your liking it down because if I had to guess you probably collect some sort of government assistance because of you work for a company or own a business no oil means no paying customer be it clothes to food. Each one of our rigs that goes down means almost 100 families that have no income tell me how that is so great. But go ahead enjoy your low gas because when we do go drilling again I hope it goes to 6.00 a gallon.

    • How much gas can you buy if you don’t have a job?? See all of us in the oilfield that depends on the price being up so we can work like the price of gas at 3.00 you just budget for it been doing it for years now. I’m sure you your liking it down because if I had to guess you probably collect some sort of government assistance because of you work for a company or own a business no oil means no paying customer be it clothes to food. Each one of our rigs that goes down means almost 100 families that have no income tell me how that is so great. But go ahead enjoy your low gas because when we do go drilling again I hope it goes to 6.00 a gallon.

  8. Cut out overseas oil completely! Do not need the goat Humpers oil!!

  9. Ride your bikes… 😛

  10. Lies to subsidize, they will just drill at a slower rate.

  11. Awwwwww…..where is my tissue?

  12. You guys are preparing to beg the government for money stolen from us. You aren’t a company. You are Mercantilist Welfare Whores.

  13. Maybe if they take a pay cut from 36 bucks an hr for the grunts and the big wigs take a little cut then they can keep going! Take a look at Detroit same thing going to happen here.keep demanding more and more the money runs out then your left with nothing’…… why don’t people ever see the big picture in anything

    • And it is obvious you don’t work in the field and are jealous that you don’t make the money we do. Welcome to hazardous job pay.

    • I am as well a truck driver I have worked in hazardous jobs. I grew up on farm with nothing and worked hard and earned my way up the ladder in life and work.one thing I learned in life its hard and you want something you go get it.it will NOT be handed to you and to make a business survive you need to look at big picture and focus long term not short term.look at Detroit it good example they kept demanding more more more and the workers got lazier and lazier. I have seen these plants and the things that happen.now with that said not all workers were that way but many were this country needs to take ten steps back and think about things then maybe it go one step forward!

    • I work on the oilfield and we just took a 10% paycut across the board to hedge against falling prices. To be honest, it will minimally impact my standard of living and will allow for drilling and production to continue.

    • U do realize people work 100 hours a week.

    • That is there choice to be that damn greedy !!! Nobody put a gun to there head and said they had to !!

    • If theres a job to do, you do it. We didn’t come to north dakota to put in 40 hour weeks

    • Grunts don’t make $36/hr fool

    • Bob wins inept jackass of the day!

    • U people that dont do oilfield work need to kindly shut up….I pray that all the oil field trash do not lose thier jobs….

    • Do you have any idea how much an apartment is in Williston.

    • 2 br 2 ba is $3k a month….. I know it’s mine….I moved 2000 miles to better myself not to get screwed by freakin OPEC…. 80 I wanted to struggle I would still be at home..

    • Oh and “grunt” workers don’t make 36 and hour.. Some diesel mechanics, don’t even get that pay.. When you start your lucky to see 22.50 but yes let’s cut what few good paying american jobs we have to send them somewhere else again?!?

    • Sheesh. Probably a water hauler. They are the only ones ignorant enough to spout out this garbage.

    • Oh lord, “truck drivers”

    • I almost wish nd would fold up overnight so all these stupid Bastards that don’t work here in the oilfields would see just how nd and texas have carried the United states for the last 5 years. I came here to better myself I’ve worked up to 117 hours a week before and love it. We are hard working people but because of morons and liberals and this stupid President we are getting screwed.

    • I’ll haul water for 36$ an hour lol

    • I work in the chemical industry. Most of our acids go to the oil fields. Y’all better keep workin! I need another pay raise!

    • 36 an hour? You must be high.

      Try 15+2% of job ticket, Wish I made 36 an hour…

    • Biggest problem I see up here in NDak is you have too many companies up here that hire just about any old garbage. Half of that garbage hired is hired to do jobs where they can work effectively without supervision. Most take advantage of it, and several companies are failing because they don’t hold them accountable for the hours they work. Big oil will continue to push them out of business until they bankrupt and after which they will buy their assets for pennies on the dollar. All the seasonal workers might as well not come back up during the summer, because they won’t start out at $28+ an hour anymore. Lucky to get $22-25

    • Dream on if you think it’s 36 an hour

    • Even if it were 36.00 per hour, oilfield workers work hard in unsafe and extreme conditions. They deserve every bit of it!

    • You can not compair working on a oil rig to detroit.These guys deserve every dime they make

    • You have to make good money in the Bakken to pay for housing and food.

    • Try being at the top of one of those rigs with a tornado headed right for you. Or lightening lighting up the sky all around you. You work IN the rain, ice, snow, cold, heat. You work even when something important is going on at home. You work when you’re sick and can barely function. Is it a choice? Yes, but thanks to some choosing to do this work we get cheap fuel. Detroit? Not hardly. Don’t see these those working conditions in Detroit.Blame OPEC. They are purposely trying to destroy the US oil market. I hope some day they have it for breakfast! I, for one, am tired of their strangle hold.

    • You can’t compare a unionized work force (UAW) with an industry that puts in 12+ hours a day(for who knows how many days in a row) work and doesn’t receive nearly the same benefits. The fact that companies like gm pay out more a year in retirement pay than on steel to produce product is ridiculous. No holidays, no weekends, no climate control, extremely unsafe working conditions, and so many more reasons that you wouldn’t understand as a trucker are the reason oilfield workers bring in “middle class” wages.

      Even at the wage I make I contemplate every day if it’s worth it to be out here working hundreds if not thousands of miles away from home for 4+ weeks at a time. 3000-3500 hour work years takes it’s toll. Be greatful for the job you have hauling loads. I hope you’re a septic truck driver.

    • You go work at -30° weather tripping pipe and talk about a pay cut

    • Ignorance is bliss. Work in the oilfield and then say you’ll take a pay cut. Don’t chime in on something you obviously know nothing about!

    • So many people have all the answers… But actually know nothing…

  14. What happened to the electric car?? We can build a car jump starter the size of a I phone but can’t mass produce electric cars ???

  15. Quit buying oil from overseas

  16. At least now we know where it is for the future

  17. Simple supply and demand. Does this every time. Why is it a surprise?

  18. IMF estimates the Saudis have $826billion in cash reserves. Saudi Oil minister says OPEC wont reverse course even if oil hits as low as $20 a barrel wih no problem. http://www.bloomberg.com/news/2015-01-09/why-opec-is-talking-oil-down-not-up-after-48-selloff.html

  19. Gonna be lucky to get back to 60 by December

  20. I hope they stay down and that my father in laws property value tanks and he’s stuck with a worthless acre of land with his trash heap of a home and big ugly steel building. The people of Mckenzie County have no idea who they elected Sheriff. . None.

  21. Burn down their oil fields

  22. I wonder how much oil we still import? It would be nice to stop imports from OPEC nations or at least reduce them. I say this should be done abruptly so the global market is flooded. See how long their economies can survive with out us.

  23. its going to take 18 months for this to work itself out. after the supply starts dropping it will come up again slowly

  24. Also we should stop all agriculture exports to OPEC nations. Let the Russians and European Nations feed them. Send the price of their food skyrocketing. Let’s destroy their economy like they have ours! These little Rats need to be put down once and for all!

    • You do realize that those countries buy a lot of durable goods from us, like jet aircraft, military equipment, food…etc. I said “buy!” So other parts of our economy reap benefits

    • I seriously doubt it makes up for the loss of control in sense of energy costs.

    • Are you kidding me…. They have not destroyed the US Economy, it’s once again the US that has messed up the world oil price – this time it’s the actual O&G industry in the US that has caused it. Your regulation of drilling and production is terrible and as such caused a massive over production. If we didn’t have the objective of being “Energy Independent” and began exporting our Energy 25 years ago like every other major producer – we have a far more

    • stable oil price and another very crucial revenue generating entity.

  25. Hoping some of these shale drillers slow their role. 1.2 million BPD is part of the reason production has surpassed demand.

  26. If I was running this mofo the air campaign would already be over and the boots would be kicking in the doors 😉

  27. is this just a way to break the wages

  28. Pretty sure Saudi Arabia needs some democracy.

  29. They didnt need that price when it was $130.00 a barrel. They just smiled & watched the country go broker

  30. 400 ppm co2 in the sir and you idiots are scrounging for blue collar jobs to finish off the job of making earth uninhabitable, all your offspring will have miserable lives , but you obviously can’t think that far ahead

  31. Wow…idiot. Won’t even entertain that one.

  32. Costs are different where ever you go. It cost about 61 a barrel in the permian basin. It costs around upper 40s in other places and 78 in another. Regardless we do not need more government involvement. In fact remove current restrictions on selling abroad and make it free enterprise and things will be better

  33. The time has come to move towards electricity!

  34. Olav Berg, so the air pollution from Arab Nations, South America, and Russia stays in it’s country of origin? I’m a dumb blue collar hick who needs this clarified!

  35. It seems people forget about the countless manufacturing jobs lost by this. Those rigs and their tooling don’t build themselves!

  36. Never thought I’d find myself praying for higher gas prices son.

  37. Federal government needs to open crude oil exports.

  38. Welcome to economics. There’s no business in the world that makes money all the time. Suck it up and ride it through.

  39. We need to depend on our own oil and tell OPEC and the lot to bite it! We have enough to take care of ourselves, but this administration doesn’t want that. They not only want us dependant on OPEC, but the government too….and to bankrupt America so we’re on tge same level as the less fortunate countries that we have apparently robbed!! So while Saudi and OPEC are at the heart of this oil glut, the liberal administration is happy to see it happening!

  40. As a consumer, I’m ok with the lower gas prices. Being a nodak, and seeing how it’s destroying this state I could care less if the oil production went down. The state did just fine before it, after it, during it and it will be fine after it leaves again.

  41. I’m as sympathetic to the drllers and their need for higher price for crude as they were to my need for lower prices for gas.

  42. Gas is 1.57 a gallon here in Oklahoma . keep producing in the US rather than importing it and the oil workers can continue to have work; however, no business goes without ups and downs. I can’t tell you how many existing oil wells here in the state hadn’t been running the last several years and now all of the sudden.

  43. Somewhat off main topic but many don’t realize the products from petroleum so not only the Oilfield jobs in USA affected but everyone producing products from petroleum that equals fewer jobs also.

  44. Keep producing don’t stop…….them dungeries can’t keep pumping forever….if you need money ask them millionaires in congress to give you some …..they got enough… most of them didn’t go there stinkin rich…..

  45. 140 rigs huh, that’s another 37 rigs that are going to be laid down. Work hard and be the best!

  46. Double the number of rigs and take it down to 25.. 1 dollar per gallon…

  47. Well tell OPEC to foff and stand beside Putin

  48. Guess big oil has to scale back its HUGE profit margins and tighten its belt. “NOT” good ole middle class Americans will ensure the rich get richer. So back up oil prices go. You forget who big oil really is in the middle east. Same as here folks.

  49. Corporate greed is going to drive prices right back up.
    If gas prices stay low, ppl spend more money, but if we’re paying 80bucks or more to fill up , we don’t have that extra money to spend else where. But greedy oil companies don’t think that way , they want every dime for themselves.
    If Bakken can’t make money at lower oil prices, get out the business and watch how many others come in and make money at lower oil prices.

    • Doesnt work that way….its not just drilling, you got rental crews, frack crews, pipeline crews and all the construction crews along with the welding crews, Xray crews , safety crews, well control, well servicing, maintenance, compressor techs, automation, land owners, company men, foremen, green hats, white hats, excavation, water tank drivers, sand truck drivers, hot shot drivers, supplies and sales….theres alot more that goes into it than just drilling. ….trust me

  50. Um. Are they complaining about cost?

  51. Hope oil goes up to 80+ a barrel and stays there.

  52. Oil today is $48.65 oops. Gonna drop some more too

  53. For all of you who want lower gas prices and still want to have nice things quit supporting Obama and buying foriegn oil and let’s create more jobs by building more refineries and become 90 percent self sufficient

  54. It damn sure going get worse before it gets better.

  55. I saw this in the mid 80s.
    Oil dropped almost 70% to shut down oil boom in US.
    Sorry- but the oil workers on US are f**ked. US should set their own price at 50 barrel and import nothing.

  56. Build it here. Drill it here. Buy it here. Sell it here. USA!

  57. People need jobs and low oil prices aren’t helping. There are other states with no oil that build products for oilfields…feel bad they are losing thier jobs

  58. Bakken oil was 31 and change

  59. Our govt will screw it up. Too many middle men begging for $ instead of actually working and deserving an income. Look what happen to ethanol.

    • The problem with ethanol is two things, it was bad for the environment and the farmers couldnt produce enough corn to sustain it…the reason I know this is because my family farmed and abted corn for about a year and realized it was a bust

    • U r wrong David Mcgrew, the reason ethnographic has become affordable is because they haven’t figured out the right process to get all the molasses out to make it feasible.

    • Is it true that the govt subsidizes ethanol production so it won’t cost $5 a gallon?

  60. The company I work with In Texas say we break even at $28bbl, but we would probably shut things down at the lower 30’s then turn back on when it comes back up. The reason these big ones(like in ND) take $70 oil to run is because there deep horizontal wells with huge fracking programs. Takes multi-millions to drill one well.

  61. Works for me, ill get on unemployment and do odd jobs and maybe go back to school….then when prices go back up, make even more in the Oil and Gas Industry with my degree…..

  62. RESERVES!!!!!!!! Put it in reserves. It’s called investing!!!!

  63. When the price goes back up, SELL IT!!!!

  64. $33 to $42 a bbl to make a profit for the better fields…… Many new wells $7 to $25 cost bbl in TX, ND

  65. And how much for the eagleford?

  66. Keep those oil prices dropping!!!!

  67. I think there should be a cap on the how high it can go.

  68. They need to cap how high prices can go, and stop this crap. Cheaper Gas Prices Means more money to spend and things will get more affordable in the long run. People can afford to live with less pay.

  69. Y’all need to hurry up and begin selling LNG to the global market, get rid of your current administration and finally put polices in place to sell your oil on the global market. That way OPEC loses control of the global production!

  70. So you can be assured that it will stay below that price for a while

  71. We would have no problem supporting drilling or anything else if prices were as low as $10/bbl. the problem is importing foreign oil and the greed of the oil companies! They through it all over the news that at $20/bbl they were making billions of dollars per quarter, now they are saying they can’t make it! Why not? Cut your pay a few million a person and see how that helps!!!

  72. Start drilling our own oil finish the key stone stop foreign dependency & we can produce our own & keep it cheaper. Common sense but the government & epa don’t have any.

  73. The free market will take care of it!

  74. By large cap oil stocks NOW!

  75. It’s funny when it was150 a barrel. We were complaining. And these. Guy’s. Were laughing. Whose. Laughing. Now

  76. It’s the same. With milk cost less than a dollar to make a gallon. But it’s five bucks in stores

  77. The people saying no probably have worthless jobs or even worst y’all are tiring to save your PARENTS on your lazy ass gas money.

  78. I would pay 3.00 a gallon happily if it came from the usa. But how could you believe or government

  79. Oil is sold on the world market as a futures commodity.
    Drill baby drill is sending oil to China.

  80. Junk bonds funding at the root again. Hang on for the ride if your company is leveraged out.

  81. Everybody get your reserve now the. Boycott the gas stations when the price rises.

  82. Yes you need to reimburse the CEO for his divorce settlement

  83. Let’s hope for the best

  84. we engineers need to find a way to produce these shale reservoir on a more cost effective manner; we can’t blame forever overseas oil industry to justify the lack of technology available on our soil in order to maintain steady production will the oil price fall..
    Like · Just now

  85. To quote Warren Buffet – “When the economic tide goes out, you find out who is swimming naked” – A turn in the market cycle can leave companies who are heavily leveraged or unable to ride out the economic tough times, exposed. It is survival of the fittest.

  86. Take it out of exec salaries and bonuses

  87. 10 to 15 well placed missels around Saudi Arabia would bounce oil prices back over 100.00 a barrel. This is not rocket science. Well not exactly.

  88. Leave the prices low and cut out the greed in the government and the oil companies

  89. The experts say $60 oil for most producers…..