From Platts' The Barrel blog:
As oil prices continue to fall amid flat demand and near-record
supply, a dramatic production slowdown is expected to hit the US
sometime this summer, if not earlier.
But no matter how unfavorable market fundamentals may be to Bakken
operators, North Dakota is likely to see a “big surge” in production
this June, potentially besting another supply record even if prices
continue to crater, according to Lynn Helms, director of the state’s
Department of Mineral Resources.
This surge will be largely propelled by
two factors: a state-mandated time limit on drilling and the expected
trigger of a major oil tax incentive, Helms said.
Helms, the state’s top oil and gas official, reported last week that
North Dakota oil production fell about 3%, or about 37,000 b/d, to 1.190
million b/d from December’s all-time high of 1.227 million b/d. The
reduction was expected as sweet crude prices averaged $31.41/barrel in
January, down from $40.74/b a month earlier and the statewide rig count
fell by 21 to 161.
But Helms said he doesn’t expect production to tumble dramatically,
even as prices continue to fall, and even though he expects the
statewide rig count to “bottom out” at about 100 rigs. Production, he
said, will likely remain between 1.1 million b/d to 1.2 million b/d over
the next few months.
But Bakken production could suddenly skyrocket, by nearly 10%, or an
additional 75,000 b/d, to 100,000 b/d in June, Helms said. This means
that despite low prices and production curtailments throughout much of
North America, oil production in North Dakota could actually shatter a
new record this summer....MORE
