The general election, not demand, is driving the spike in oil production in North Dakota

Published: Sep. 15, 2020 at 9:43 PM CDT
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BISMARCK, N.D. (KFYR) - After months of dwindling oil production, June was a month of rebound as thousands of shut-in wells began to re-open. That gave industry leaders and regulators cause for optimism.

Leaders from the Department of Mineral Resources reported oil production has increased by more than 16 percent and is back to more than one million barrels a day for the month of July. They said that spike is likely to continue through August and September, but the source of this increase in production may not be based on market demand. Demand for oil is low, storage is still full, and gas prices are slowly decreasing as winter approaches, yet oil production in North Dakota is currently increasing.

“We’re at a fairly tenuous situation where we want to see crude oil production rise in North Dakota, but it’s bumping up against all this oil in storage,” said Department of Mineral Resources Director Lynn Helms.

Helms said it’s in part due to the upcoming general election: if Joe Biden’s elected, oil production could come to a halt.

“All or much of that activity has been driven by concern that federal permits won’t get renewed. That if you have a permit in hand to drill or frack a well, you’d better do it now,” said Helms.

The production numbers prove that heightened activity. Inactive wells decreased from more than 4,000 in June to just over 3,500 in July. But with only about 10 drilling rigs operating in the entire state, industry leaders say oil production is still at a modern-day low.

“If there’s not a tremendous amount of growth in that curve of future oil prices, that would just depress the level of activity that we would expect in the region. And without that activity, it makes it more difficult to bring the production levels back up in a timely fashion,” said North Dakota Pipeline Authority Director Justin Kringstad.

Kringstad said pre-pandemic oil production levels of well over one million barrels a day aren’t feasible for another two to four years. Industry leaders said the uptick in oil production is only expected to last until the end of September.

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