North Dakota Oil Patch back to record-setting pace

North Dakota’s Oil Patch has mostly geared back up from setbacks related to the wet spring and unusual flooding across the western part of the state. As of Wednesday, a record 184 rigs were drilling new holes, said Bruce Hicks, assistant director of the oil and gas division of the state’s Department of Mineral Resources, which regulates the Oil Patch.

That is six more rigs than the previous record earlier this year and the first time it’s gone above 180.

The industry rule of thumb holds that each drilling rig represents 120 jobs, directly and indirectly, so the total rig count indicates about 22,000 jobs in the Oil Patch.

Meanwhile, crude oil production also hit a record in May of 361,438 barrels per day, after falling back a little in April due in part to the wet spring conditions. That represents about 6.5 percent of U.S. crude oil production, another record for the state.

The May production figure, the most recent available and released by the state’s Department of Mineral Resources, shows a 21 percent increase over May 2010 daily production and a 76 percent increase over May 2009 numbers.

May production also was up from 351,244 barrels per day in April, and 360,102 in March and shows that monthly production totals are now above 11 million barrels.

The number of producing oil wells also hit a record of 5,329 in May.

“It certainly appears some additional rigs are moving in because things are starting to dry out a little bit,” Hicks said Wednesday. Some roads in the Oil Patch had to be closed because the wet conditions made them unusable this spring.

“We are seeing oil companies start to work with township boards and some counties to try to maintain certain roads,” Hicks said. “I think through those partnerships we will be able to realize better avenues to get in and out with truck traffic.”

If the production keeps increasing at the same pace it has through May, total output for 2011 will hit about 133 million barrels, up from 113 million in 2010 and 80 million in 2009 and a tripling of the 40 million produced in 2006 when the boom in the Bakken formation got under way.

“We should be easily able to attain that,” Hicks said.

North Dakota trails only Texas, Alaska and California in terms of state oil production.

Texas is at 417 million barrels, Alaska at 219 million and California at 204 million. North Dakota produced 113 million barrels in 2010.

With about 600,000 barrels a day, Alaska and California likely will hold on to the No. 2 and No. 3 spots for two or three years, Hicks said.

The nation’s top oil-producing spot isn’t a state — it’s the Gulf of Mexico at 598 million barrels.

But North Dakota is seeing more growth than any of the nation’s 31 oil-producing states or off-shore, said Richard Rathge, director of the North Dakota State Data Center in Fargo, in a news release.

“North Dakota is the only state among the largest oil-producing states to have increased (output) from 2000 to 2010,” Rathge said “For example, during that period, Alaska dropped its production by 38 percent, California 25 percent and Texas 6 percent. Meanwhile, North Dakota increased production by 242 percent. If these trends continue, North Dakota could outpace both California and Alaska within four years.”

Since annual oil output in the state dropped to a longtime low of 29 million barrels in 2003, it’s increased about 22 percent each year.

Meanwhile, nationwide oil production dropped every year but one (1991) from 1985 to 2008. U.S. oil output was up 7 percent in 2009 and 3 percent last year, according to Rathge’s report.

Last year, Mountrail County led the state’s 17 oil-producing counties with 46 million barrels, nearly 41 percent of the total; McKenzie County was second with 16 million, Dunn at 15 million, Bowman at 11 million and Williams at 10 million.

The price of crude oil has remained high, spurring the development in western North Dakota. Although the price for the traditional benchmark West Texas crude has slipped below $100 a barrel, the more recent world price maker, Brent crude taken from the North Sea, remains $20 a barrel higher. North Dakota’s sweet crude that comes from the Bakken formation typically gets discounted $8 or so per barrel from the West Texas crude price because of the higher cost of transporting it to major terminals.

By: Stephen J. Lee, Grand Forks Herald