When it comes to reporting what's going on in US oil and gas producing states, even the dimmest Washington, DC, reporter periodically remembers to start by speaking with people who are actually there.
Take North Dakota, for example. There are perceptions that Bakken crude increasingly leaves the state by rail because pipelines are inadequate, that plunging global oil prices in the last year have reduced the Bakken boom to a mild pop, and that gas associated with Bakken crude production continues to be flared.
Telephone conversations with state and industry officials in North Dakota revealed that the situation there is anything but static. Progress is being made.
"The impact of oil prices and the slowdown is providing a window of opportunity for infrastructure to catch up and get on the leading side of that curve instead of chasing it so hard," North Dakota Department of Mineral Resources Director Lynn D. Helms said.
"All of the large pipeline projects are 2017 and beyond," he told OGJ. "We're in a pretty good spot right now because we anticipate production staying pretty flat, between 1.1 million and 1.2 million b/d. Because of oil prices and the inventory of uncompleted wells, we expect that to go on for 1½-2 years. After that, we could go into a higher production mode with new pipeline capacity."
Rail's share of total Williston basin crude transportation peaked at around 800,000 b/d toward the end of 2014, and has been falling ever since, North Dakota Pipeline Authority Director Justin J. Kringstad said. Pipelines' 46% share nearly equaled rail's 47% in June, he indicted. Two projects with capacity totaling another 675,000 b/d are expected to be operating in 2017, he added.
"We've seen the rig count drop to 74 rigs now from 190 in 2014," he told OGJ. "Going forward, the question will be how long these lower prices will be going on and what impacts they will have on production."
Infrastructure progress
"Progress is being made on infrastructure," North Dakota Petroleum Council Pres. Ron Ness reported. "The legislature put $1.2 billion in surge infrastructure funds in the first 30 days of its 2015 session to assist communities. That almost became a jobs bill when companies had to lay off employees because of low crude prices."
Reduced activity still concerns producers, "but we're also seeing substantial improvements in efficiency that companies have implemented," he told OGJ.
Producers asked the state's Industrial Commission for more time to meet Jan. 1, 2016, flaring reduction goals. Helms said the commission agreed to give them another 10 months if they committed to reaching higher goals then and subsequently by Sept. 17.
