March figures reveal a struggling oil industry amidst a price war and a pandemic
“Over the last week or so we've seen additional wells shut-in and additional production shut-in to the point where we're pretty solidly convinced that we're below a million barrels a day. And somewhere north of 7,000 wells shut-in,” said Department of Mineral Resources Director, Lynn Helms.
Newly released oil production numbers show how the world's oil glut, coupled with the COVID-19 pandemic has negatively impacted North Dakota's oil industry.
March was a tough month for the industry as the Saudi Arabia and Russia price war and the coronavirus pandemic simultaneously shook the market.
Twenty-five frack crews completed 120 wells in March, but today there's only one frack crew left in the state.
Department of Mineral Resources leaders said only twelve rigs in the state are drilling for oil and gas, an almost 80 percent decline in rig count.
They said they're expecting four to five more rigs to be released in the future.
As demand for oil production drastically decreased in March, oil had nowhere to go, resulting in a record amount of supply that nearly overwhelmed the country's storage capacity.
"When you look at the crude oil storage, we've never been at this level, at this time of the year in history," said Department of Mineral Resources Director, Lynn Helms.
Helms said though there's an excess supply of oil, WTI crude market prices are rising, sitting at almost 30 dollars a barrel Friday this combination could confuse producers.
"There's a lot of mixed signals out there. The price is signaling to operators "maybe we should return some wells to production," but the storage is saying you're going to be able to fill this storage again very quickly. We could see a lot of volatility over the next few weeks," said Helms.
The June contract expires next week, raising concerns that the market could plummet once again, the same way it did when market prices dipped below zero as the May contract expired.
Helms said they're looking into several ways to help oil companies obtain funding.
They've considered CARES Act money and Bank of North Dakota or federal loan programs.
He predicts production may pick back up in the 4th quarter of this year or the 1st quarter of next year.