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North Dakota reports record May gas output

14 Jul 2017 22:49 (+01:00 GMT)
North Dakota reports record May gas output

Houston, 14 July (Argus) — Natural gas output in North Dakota reached a record high in May as producers continue to focus on the most prolific areas of Bakken formation.

Gas production in May increased to 1.85 Bcf/d (53mn m³/d), 1pc higher from April and 13pc more than in May 2016, according to the North Dakota Department of Mineral Resources.

May crude production was down by more than 10,000 b/d, or 1pc, compared to the previous month to about 1.04mn b/d. Nearly all of the gas produced in North Dakota comes from the state's oil wells.

"I would not be surprised if gas production sets a new record in June," as producers are focusing in areas with high gas-to-oil ratio, despite crude production falling by 20,000-30,000 b/d in that month, according to department director Lynn Helms.

Gas captured by North Dakota operators in May remained unchanged from a month earlier at 90pc. But the amount of flared gas increased month-over-month by 11.4mn cf/d amid rising gas production. Lack of investment in infrastructure could stall the production growth and increase gas flaring in that state.

Natural gas and natural gas liquids are not profitable to North Dakota producers at current prices, according Helms, which limits investment in gas gathering infrastructure.

A prolonged downturn in oil and gas prices following a shale-driven production boom has cut investments in the energy industry for nearly two years. Prices have recovered this year but slower than prior expectations.

The prompt-month Nymex futures contract this year is averaging $3.09/mmBtu, up by 43pc from the year-earlier period, while WTI crude futures is up by 23pc to an average of $49.65/bl.

The number of producing wells in North Dakota in May rose to an all-time high of 13,876. The estimated number of wells waiting on completion at the end of May was 830, unchanged from a month earlier.

North Dakota today has 58 active drilling rigs, up by eight from the end of May. The all-time high was 218 rigs in May 2012.