North Dakota: Crude Production is Being Focused in Four Core Counties
The crude oil price drop has yet to chase all producers out of North Dakota, and it likely won’t – as long as prices remain at or above a critical threshold, according to recently released analysis by the North Dakota Department of Mineral Resources House Appropriations Committee.
In doing their analysis, the department looked at several areas affected by wilting crude oil values, including well permits, rig counts, production projections and even breakeven pricing.
What the department concluded is that new drilling would not cease until prices fell to $30/barrel or less, far lower than prices in the mid- to upper $40s a barrel seen in recent days.
The drop in prices has slowed production in the state dramatically, however, and drillers that have remained are focusing on “the most bang for the buck,” Alison Ritter, spokesperson for the House Appropriations Committee, told Rigzone.
“They are focusing their efforts on four counties – Mountrail, McKenzie, Dunn and Williams,” Ritter said. “These are the counties offering the lowest breakeven point for drillers. When prices begin to climb again, we will see more activity outside the core region.”
According to the analysis, Dunn, at $29, offers the lowest breakeven price of the counties examined. McKenzie, at $30, is close behind, with Williams and Mountrail coming in at $36 and $41, respectively.
In BOW-SLP, at the other extreme, the breakeven point for drillers is $75 oil.
The drop in crude prices results in a drop in rigs, as well, according to the production projections of the department. However, even if crude values drop to $25 per barrel in the third quarter of 2015, North Dakota is still projected to produce about 1 million barrels of oil per day. Fifteen dollars a barrel is the price at which production from existing wells would be shut-in, according to the analysis.
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