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North Dakota oil production on the upswing again but may plateau this fall

By Mike Hughlett, Star Tribune (Minneapolis) on

Published in Business News

North Dakota's oil and gas production soared 16% in July as operators reopened wells that had been shut-in earlier this year due to the economic downfall caused by the corona­virus pandemic.

The increase was expected, and another jump is anticipated for the remainder through this month as more shut-in wells are retapped.

But unless oil prices improve significantly - and that doesn't seem likely - oil production is then likely to plateau and possibly fall, Lynn Helms, director of the North Dakota's Mineral Resources Department, told reporters.

"We don't see pre-COVID demand coming back until probably late 2022," he said.

North Dakota, the nation's second largest oil-producing state after Texas, pumped out 1.04 million barrels per day in July, up from 893,591 barrels per day in June and even fewer in May when output hit a seven-year low.

"I am happy to report that in July, production got above 1 million barrels per day," Helms said. "It was certainly a departure to be below 1 million for May and June."

 

The state posted record oil production of 1.52 million barrels per day in November.

With economic lockdowns sapping oil demand and sending prices to historic lows, U.S. producers curtailed output. But shut-in wells have increasingly come back online as prices rose from the teens in April to over $40 a barrel in August.

Still, West Texas Intermediate - the benchmark U.S. crude price - has fallen this month, settling Tuesday at $38.39 per barrel.

The U.S. summer driving season is ending, a negative for fuel demand. At the same time, "we still have tremendous amounts of crude oil in storage," Helms said. "Prices are soft, and they are going to stay soft through the winter unless something extraordinary happens."

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