North Dakota oil output drops about 40% after blizzard, freeze; restoration continues

North Dakota has restored some of the oil output that was curtailed during the recent blizzard and freeze-offs, but an estimated 40% of production remains down, an official state source said Dec. 27.

Oil production in North Dakota is estimated to be 650,000-700,000 b/d as of Dec. 27. Using 1.12 million b/d as the baseline, overall state oil production is estimated to be down 400,000-450,000 b/d, Jessica Petrick, spokeswoman for the state's Department of Mineral Resources, told S&P Global Commodity Insights in an e-mail.

"That's about a 40% reduction due to recent storms and travel difficulties," Petrick said. "Weather conditions are improving rapidly, and [upstream] operators are working quickly to restore production."

Blizzard conditions prevailed Dec. 19 when DMR Director Lynn Helms gave his monthly production webinar, which had been delayed due to the weather conditions. The harsh weather caused shut-in production of 300,000 b/d to 400,000 b/d, but by Dec. 24-25, more shut-ins had occurred.

According to North Dakota's latest monthly production figures, the state averaged 1.12 million b/d of oil output in October, flat with September.

Natural gas production was down 1% to 3.143 Bcf/d.

Half of state drilling now on non-core lands

During the webinar, Helms said about half of North Dakota's well drilling and completions activity is now taking place on Tier 2 lands—i.e., non-core areas of the Bakken Shale/Three Forks reservoirs.

"A large part of activity has shifted out of the core area, which continues to experience growing gas-to-oil ratio into the much less-drilled Tier 2 area," Helms said. "So we're seeing a lot more untapped reservoirs with no depletion and a lot lower gas-to-oil ratio in Tier 2."

For comparison's sake, Tier 1 is 80-85% drilled, but Tier 2 is about 50% drilled, he said.

"We may begin seeing the beginnings of a trend, which is what we expected," he added. "With the advent of three-mile laterals—that is, horizontal well legs—[there may be] a lot more economic activity in Tier 2 and Tier 3 areas."

He said two North Dakota areas with "significant" production increases in October were Divide and Burke counties, which haven't been discussed for a long time on the monthly webinars. But Helms said there are "several indicators" pointing to increased industry activity in those Tier 2 and Tier 3 areas.

"[The increased activity] was brought about by technology innovations that allowed us to get to three-mile laterals with virtually the same amount of time and expense that two-mile laterals took just a couple of years ago," he said.