North Dakota oil output posts biggest drop in history

By Ernest Scheyder

(Reuters) – North Dakota’s oil output fell the most in history in April, with low crude prices and inclement weather forcing producers to cut back the drilling and fracking of new wells, state regulators said on Wednesday.

The output drop highlighted the deep pain spreading through the second-largest oil producing state, with the more than 50 percent drop in crude prices since late 2014 fueling spending cuts and layoffs.

The state pumped 1,041,007 barrels of oil per day (bpd) in April, 70,414 bpd less than March, according to the North Dakota Department of Mineral Resources (DMR), which reports on a two-month lag.

The drop was the largest monthly decline in the state’s history, due largely to low prices but also windy weather throughout much of April, which delays the fracking of wells, said Lynn Helms, head of the DMR.

“You just can’t really ignore the significance of that” production drop, Helms told reporters on a conference call.

The slide is expected to accelerate through May and into the summer, he said.

Helms had previously forecast the state’s output to fall below 1 million bpd by January, but on Wednesday he said that mark could be breached before the end of the year.

“It’s going to be very hard for industry at these kind of drilling levels and prices below the $50 mark” to maintain production, Helms said. The state has begun collecting May production data from companies and will report it next month.

There were 1,590 inactive wells in North Dakota during April, an increase of 67 from March. Producers put wells on inactive status for a number of reasons, though economic stresses often are the primary cause, Helms said.

There were only 28 drilling rigs in the state as of Wednesday. A year ago there were 77.

The drilling rig count rose by 1 from the level during last month’s production report, which Helms described as a “positive.”

Still, there are no drilling rigs operating in Williams County, home to Williston, the de facto capital of the state’s oil industry.

While 66 drilling permits were issued in April, an increase from March, that number dropped to 42 in May, the DMR said.

Natural gas production fell from March’s all-time high of 1.7 million cubic feet per day (cf/d) to about 1.6 million cf/d per day in April.

(Reporting by Ernest Scheyder; Editing by Chizu Nomiyama and Meredith Mazzilli)