N. Dakota Official: Floods Have Idled 5 Rigs, Shut Down 45 Wells

HOUSTON (Dow Jones Newswires), June 28, 2011

Bad weather, flooding and road restrictions are disrupting oil production in North Dakota, shutting down the transportation by rail of 50,000 barrels a day of crude, a state official said.

"No one was prepared to deal with floods that are breaking records set 130 years ago," said Lynn D. Helms, director of the North Dakota Industrial Commission's Department of Mineral Resources said in an e-mail sent late Monday. Helms said the temporary shutdown of the rail transportation will last until it can be re-routed west, but didn't give an estimate as to when that might occur.

The weather has forced the shut in of 45 wells and idled five drilling rigs and is delaying the arrival of service crews to 500 wells waiting to be fractured, Helms said.

North Dakota sits atop the Bakken Shale, one of the richest deposits of oil in the U.S.--but one that requires intensive fracturing activity to yield crude. Last year, it produced an average of about 307,000 barrels of oil per day.

Michael Marino, an analyst with the investment bank Stephens, said moving drilling supplies in and crude out of the oil patch is the main problem in the Bakken.

"Overall the biggest impact has been on the (exploration and production companies)trying to get oil out of the region because service companies have been able to work around issues to some extent," he said.

Bad weather and flooding have affected not only energy production, but also the agricultural sector and have severely damaged several cities, including Minot, in the western part of the state, where many residents had to evacuate.

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