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Uncertain outlook as North Dakota tops 10,000 shale oil wells

North Dakota surpassed a milestone in June — its 10,000th shale oil well — amid a still-gloomy outlook for its petroleum industry.

The industry, facing continued low crude oil prices, is finishing off previously drilled wells to get oil and some revenue flowing and to meet regulated completion timetables, state officials said Friday. But the number of rigs drilling new wells declined again.

Oil producers using hydraulic fracturing completed 149 oil wells in the Bakken or Three Forks plays in June, bringing the total to 10,113. The state also has more than 2,700 legacy wells from before the shale boom.

The new wells increased June’s crude oil output to 1.21 million barrels per day, up 0.7 percent over May, a pace that North Dakota officials hope can be sustained to keep oil tax revenue flowing over the next two years.

But Lynn Helms, director of the state’s Division of Mineral Resources, said things could get worse.

“Either we are going to have to see some better prices or we are going to see further contraction in the oil and gas industry,” he said on a conference call with reporters for the monthly release of production data.

The benchmark crude price has declined to $42 per barrel, after rallying in June to $60. North Dakota’s crude oil trades at a discount to the Oklahoma benchmark because of the higher cost of shipping most of it by rail. Helms said Friday’s North Dakota wellhead price estimate was $28.50 a barrel, down nearly $11 from last month.

In related news, EOG has lion’s share of 900 North Dakota wells awaiting fracking.

More deadlines ahead

Helms said producers are finishing previously drilled wells to meet a one-year state completion deadline. That surge had been expected, and Helms said another bump is likely in late 2015 and early 2016, as other wells reach their deadlines.

The number of rigs boring new wells in North Dakota is down to 74 in August, a third of the rig count at the peak in May 2012. That trend could continue if prices keep falling.

Continental Resources, the largest oil producer in North Dakota, said last week that it has 10 drilling rigs in the Bakken, but is prepared to cut the number by 20 percent if low prices persist.

Continental CEO Harold Hamm said he doesn’t see the company increasing production until the market rebalances. “These reserves and these resource plays are not going anywhere and we all have a long future, and that’s kind of the way we look at it here,” he told analysts on a conference call.

North Dakota hit another record in June — 1.6 billion cubic feet of natural gas per day. But the announcement came just two days after a major potential customer, cooperative CHS Inc. based in Inver Grove Heights, dropped its plan for a $3.3 billion Spiritwood, N.D., fertilizer plant. It would have consumed 90 million cubic feet of gas daily. CHS canceled the project because of rising costs, and invested in a large Illinois-based fertilizer producer instead.

“It is a pretty serious blow,” Helms said of the dead project.

This article was written by DAVID SHAFFER from Star Tribune and was legally licensed through the NewsCred publisher network.

24 comments

  1. And the price is dropping into the 30’s

  2. Or we could grow fuel ( Hemp ). ☕️

    • How many acres are you willing to take out of food production?

    • You act as if all acres of land are taken up. What an ignorant comment.

    • You are right Collin, hemp oil could be used to replace crude oil to produce fuel. You also mention land, and, you are right, it is not all taken up to grow food. However, land is the reason hemp is not a viable solution for the US.

      According to the EIA, the US consumed 6.89 billion barrels of oil in 2013 of that 0.32 billion were biofuel, so the US consumed 6.57 billion barrels of petroleum.

      http://www.eia.gov/tools/faqs/faq.cfm?id=33&t=6

      Also, according to the EIA 75% of the oil used is for fuel (gasoline & diesel).

      http://www.eia.gov/dnav/pet/pet_pnp_pct_dc_nus_pct_a.htm

      That would mean that 4.93 billion barrels of oil were used for fuel or roughly 207 billion gallons of oil.

      According to this report, one acre of land produces 700# of seed which can produce 50 gallons of hemp oil. The report also states that the time from planting to harvest is 70-140 days depending on the purpose, cultivar or variety, and climatic conditions.

      http://fas.org/sgp/crs/misc/RL32725.pdf

      Based on the data from this map, the weighted average growing season in the US is about 170 days. This would mean that, one to two crops of hemp could be raised during the average US growing season. Resulting on 50 to 100 gallons of oil per acre.

      http://www.cartoko.com/content/wp-content/uploads/2010/05/Paullin_1932_pl_3e.jpg

      Based in these numbers, between 2.07 billion and 4.14 billion acres of land would be necessary to supply the oil required for fuel. More if the harvest is not a good one.

      According to the chart on page 12 of this report, there are 408 Million acres of crop land in the US and 614 Million of grassland or range land.

      http://www.ers.usda.gov/media/176816/eib88_1_.pdf

      Let’s say that all of this land will be used for hemp. This would provide between 24.5% and 49.3% of the oil we need. Not to mention that we would have no land to grow our own wheat, corn, vegetables, and feed. Also, no land for livestock to feed on.

    • Yes, Brad. That’s what I stated above. It is whether the people care more for our earth or for personal profit. If the electricity has a monetary value to it, then yes, it will obviously be difficult to do. The monetary economy, in which we live by, is causing us to create problems like pollution, fracking and deforestation, which is killing the Earth, just for personal profit. A monetary economy is essentially slavery anyway. If the people weren’t so ignorant and selfish, we would push for change towards a resource based economy. The earth would be much better off and so would we. But again, that would require cooperation between the majority of the world. Honestly with the way things are going, it’s probably just going to stay a dream. Im just putting it out there.

  3. Get ready for earthquakes!

  4. The branches are out weighing the trunk out here if you know what I mean.

  5. Ive never seen a more messed up industry…. Its simple supply and demand…increaseing production when they are over stocked and are running out of places to store it sounds like a great idea… This price drop is gonna get lower… And the saudis had said they can break even at $20… So anyone believing the news that they are in trouble is sadly mistakin.. Fort hills north of ft mac should be up and running soon too…Almost doubling suncors production…

  6. We are all going to Frackin Hell!

  7. Fuel and oil isn’t unlimited. Obviously new and sustainable types of fuel have to be developed. Society will eventually pay the price for not developing sustainable types of fuel.

  8. Yeah lots and lots of earthquakes asked us in Texas

  9. Yes, I am certain God put the oil and gas inside the ground hoping man would never find it or use it…..you know, like his brain…..

  10. With all the droughts every where n they just keep pumping trillions of gallons of fresh water ( mixed with all kinds of chemicals ) down those wells ,kinda make you wonder wtf ??? Can’t drink oil , can’t water the crops with it , can’t put out the fires with it , ya we need oil , but we also need to seriously start to develop other technologies , when there’s nothing to eat or drink then what ?

  11. Nothing like having high prices on everything ! We are higher on produce, beef than Mt. And Minn.

  12. All you people complaining about oil are still driving around in your cars lol typical hypocritical morons

  13. Do your research people. Earthquakes? Really? Hemp fuel? Use that to plow your fields and transport your crops. Good luck.

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