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Released March 01, 2018 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--A few years ago, after North Dakota enacted rules to limit natural gas flaring, some in the industry worried that the move would cut into crude oil Production, as most of the flared gas was associated gas that was produced with oil. At that time, North Dakota producers were flaring up to 30% of the gas they produced, as much as $100 million each month, mainly due to low gas prices and inadequate processing and outbound pipeline capacity.
Low gas prices continue to bedevil North Dakota gas producers, but a multibillion-dollar infrastructure buildout is helping oil & gas production soar while keeping gas flaring well under state limits.
Crude-oil production from North Dakota's portion of the Bakken Shale fell about 20% after oil prices swooned in 2014-2015, but stronger demand, higher prices and increased pipeline takeaway capacity have allowed producers to return to their record production level - about 1.2 million barrels per day (BBL/d), according to the U.S. Energy Information Administration (EIA).
Click on the image at right to see rising crude-oil production in the Bakken Shale.
North Dakota's natural gas production has risen even faster, more than doubling since late 2013, to a record of over 2 billion cubic feet per day (Bcf/d) in late 2017, according to the North Dakota Industrial Commission (NDIC) (Bismarck, North Dakota).
Click on the image at right to see rising natural gas oil production from North Dakota's portion of the Bakken Shale.
According to Industrial Info's Global Market Intelligence platform, developers completed 48 Production, Pipelines and Terminals projects worth about $3.15 billion between January 2015 and December 2017. The Dakota Access Pipeline (DAPL) accounted for about $1.2 billion of that spend. That overall spend also included 15 gas-processing plants or pipeline projects valued at about $1.34 billion.
Rising production of crude oil and natural gas comes as the industry is using dramatically fewer rigs to produce more product. As producers fine-tune their drilling and completion techniques, extend their laterals and experiment with different loadings of frac sand, they are able to produce more hydrocarbons with up to 75% fewer rigs.
Click on the icons at right to see drilling productivity for crude oil and natural gas wells.
More good news could be on the way: Industrial Info is tracking 31 Production, Pipelines and Terminals projects scheduled to begin construction in the Peace Garden State between January 2018 and December 2019. The total investment value (TIV) of these projects is about $1.89 billion. This scheduled spending includes projects associated with the Keystone XL Pipeline, Enbridge Line 3 Replacement, Upland Crude Oil Pipeline and Bear Den Cryogenic Natural Gas Processing Plant.
Some of those projects, notably the Keystone XL and Line 3 Replacement pipelines, have been delayed repeatedly. Industrial Info does not expect all 31 of those projects to kick off construction according to their current schedules.
Expanded outbound pipeline capacity has made life easier for producers, narrowing the spread between Bakken crude oil and West Texas Intermediate (WTI), the U.S. benchmark. In January, North Dakota producers were receiving an average of $54.75 per barrel for their sweet North Dakota crude compared to $63.70 for WTI, according to data from the North Dakota Industrial Commission and the EIA. That roughly $9-per-barrel discount is far less than the $13.60-to-$16.79 per-barrel discount that existed during the summer of 2014.
"Crude oil take-away capacity, including rail deliveries to coastal refineries, is more than adequate," Lynn Helms, executive director of the North Dakota Industrial Commission's Department of Mineral Resources, said in his February report on the state's oil and gas production.
Helms also noted that, statewide, North Dakota producers are flaring only about 13% of their natural gas production, well under the limits set a few years ago. In September 2011, before the new anti-flaring regulations were enacted, producers in North Dakota flared a historical high of 36% of the gas they produced, Helms noted. Currently, producers can flare no more than 15% of their gas production.
Click on the image at right to see the proportion of gas production that must be put to beneficial use, under North Dakota regulations.
"Though no one saw the crude-oil price collapse a few years ago as a good thing, in hindsight it gave infrastructure builders a chance to catch up with producers and more rapidly comply with anti-flaring regulations," commented Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "For years, producers were penalized for bottlenecks on outbound pipeline capacity or a shortfall of gas-processing capacity. Now, it looks as North Dakota's production and infrastructure are more aligned, which allows all participants to take advantage of current favorable market conditions."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Low gas prices continue to bedevil North Dakota gas producers, but a multibillion-dollar infrastructure buildout is helping oil & gas production soar while keeping gas flaring well under state limits.
Crude-oil production from North Dakota's portion of the Bakken Shale fell about 20% after oil prices swooned in 2014-2015, but stronger demand, higher prices and increased pipeline takeaway capacity have allowed producers to return to their record production level - about 1.2 million barrels per day (BBL/d), according to the U.S. Energy Information Administration (EIA).
North Dakota's natural gas production has risen even faster, more than doubling since late 2013, to a record of over 2 billion cubic feet per day (Bcf/d) in late 2017, according to the North Dakota Industrial Commission (NDIC) (Bismarck, North Dakota).
According to Industrial Info's Global Market Intelligence platform, developers completed 48 Production, Pipelines and Terminals projects worth about $3.15 billion between January 2015 and December 2017. The Dakota Access Pipeline (DAPL) accounted for about $1.2 billion of that spend. That overall spend also included 15 gas-processing plants or pipeline projects valued at about $1.34 billion.
Rising production of crude oil and natural gas comes as the industry is using dramatically fewer rigs to produce more product. As producers fine-tune their drilling and completion techniques, extend their laterals and experiment with different loadings of frac sand, they are able to produce more hydrocarbons with up to 75% fewer rigs.
More good news could be on the way: Industrial Info is tracking 31 Production, Pipelines and Terminals projects scheduled to begin construction in the Peace Garden State between January 2018 and December 2019. The total investment value (TIV) of these projects is about $1.89 billion. This scheduled spending includes projects associated with the Keystone XL Pipeline, Enbridge Line 3 Replacement, Upland Crude Oil Pipeline and Bear Den Cryogenic Natural Gas Processing Plant.
Some of those projects, notably the Keystone XL and Line 3 Replacement pipelines, have been delayed repeatedly. Industrial Info does not expect all 31 of those projects to kick off construction according to their current schedules.
Expanded outbound pipeline capacity has made life easier for producers, narrowing the spread between Bakken crude oil and West Texas Intermediate (WTI), the U.S. benchmark. In January, North Dakota producers were receiving an average of $54.75 per barrel for their sweet North Dakota crude compared to $63.70 for WTI, according to data from the North Dakota Industrial Commission and the EIA. That roughly $9-per-barrel discount is far less than the $13.60-to-$16.79 per-barrel discount that existed during the summer of 2014.
"Crude oil take-away capacity, including rail deliveries to coastal refineries, is more than adequate," Lynn Helms, executive director of the North Dakota Industrial Commission's Department of Mineral Resources, said in his February report on the state's oil and gas production.
Helms also noted that, statewide, North Dakota producers are flaring only about 13% of their natural gas production, well under the limits set a few years ago. In September 2011, before the new anti-flaring regulations were enacted, producers in North Dakota flared a historical high of 36% of the gas they produced, Helms noted. Currently, producers can flare no more than 15% of their gas production.
"Though no one saw the crude-oil price collapse a few years ago as a good thing, in hindsight it gave infrastructure builders a chance to catch up with producers and more rapidly comply with anti-flaring regulations," commented Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "For years, producers were penalized for bottlenecks on outbound pipeline capacity or a shortfall of gas-processing capacity. Now, it looks as North Dakota's production and infrastructure are more aligned, which allows all participants to take advantage of current favorable market conditions."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
