North Dakota May Let More Oil Wells Be Temporarily Idled
WILLISTON, N.D., Sept 14 (Reuters) - North Dakota's oil regulators said on Monday they may allow more wells to be temporarily abandoned, a step that would permit producers to delay fracking beyond the typical one-year window and prevent even more crude from flooding onto global markets.
The change would fuel massive savings for oil producers in the state who have amassed a backlog of almost 1,000 wells that have been drilled but not completed with processes needed to get the oil flowing. The delays are designed solely to ride out the roughly 50 percent drop in crude prices since last year.
Any regulatory change in North Dakota also would assuage market concerns about supply continuing to outstrip demand at a time when Iraq, Saudi Arabia and other OPEC members show little sign of curbing their own output.
While no decision has been reached, the North Dakota Department of Mineral Resources (DMR) is "leaning toward" sharply increasing the number of requests to temporarily abandon wells, director Lynn Helms told reporters on a conference call.
"It's just going to be a whole lot better for everyone if we store the oil in the shale formation instead of in Cushing, Oklahoma," Helms said, a reference to the popular crude storage hub near the geographic center of the United States.
Producers currently have one year to frack and start producing oil from a well. If that window passes, the DMR warns producers they have six months to plug the well or start producing oil. It then moves to confiscate the well if nothing has been done by the end of that six-month window.
The number of North Dakota wells waiting to be completed rose by 70 to 914 in July, and most of them have one-year windows that expire in December, Helms said.
Any decision to allow a well to be temporarily abandoned would be on a case-by-case basis, he said.
"It's a delicate balancing act because royalty owners expect to get royalties from those wells," Helms said.
'Hang In There, Baby!'
The one-year window has loomed over corporate budget planning, with many producers hoping to wait as long as possible to bring new wells online.
For example, EOG Resources Inc, which has one of the largest number of North Dakota wells waiting to be fracked, told investors last week it would spend most of its capital budget in early 2016 on fracking new wells.
The rule change could abrogate the need for EOG and peers to start fracking come January.
"This sends a signal to the global markets that the state is not going to force even more oil out there," Helms said.
For July, North Dakota produced 1,201,920 barrels of oil per day (bpd), down from 1,211,328 bpd in June, according to the DMR, which reports on a two-month lag.
Natural gas production rose slightly to about 1,657,138 million cubic feet per day, also an all-time high.
Highlighting the state's resilience amid low oil prices, the number of producing wells in North Dakota hit 12,940 in July, an all-time high.
Helms compared the state's oil industry to a popular 1970s poster of a kitten desperately grasping onto a bar in mid-air.
"As you look at the fundamentals of the oil and gas industry, that seems to be the case it's in right now," he said. "The theme for this month is: Hang in there, baby!"
(Reporting by Ernest Scheyder; Editing by Meredith Mazzilli and Paul Simao)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- Gunvor CEO Sees Russian Refining Capacity Taking Hit from Drone Strikes
- These Factors Helped Brent Oil Price Break Above $85
- Sinopec Engineering Posts Higher Annual Petrochemicals Revenue
- Imperial Pipeline in Winnipeg Goes Offline for Three Months
- Gaz System to Acquire Gas Storage Poland
- Subsea7 Secures Contract to Service Woodside's Trion
- Adnoc Inks Supply Deal for Ruwais LNG Project with Germany's SEFE
- EIA Boosts USA Crude Oil Production Forecasts
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Rystad Looks at the Buzz Around White Hydrogen
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension