Energy companies are likely to keep crude output steady this year in North Dakota, the third-largest U.S. oil-producing state, its regulator said on Thursday, despite a sharp decline in oil prices after the United States and Iran signed an interim deal to end their war.
Oil prices fell on Thursday to their lowest since the first trading day of the Iran war in March. U.S. West Texas Intermediate later pared losses to settle down 0.3% at $76.60 a barrel.
Nathan Anderson, director of North Dakota’s Department of Mineral Resources, said while oil prices have fallen from about $95 a barrel on average during the war, they are still historically strong. He said operators in the state continued to produce 1 million to 1.5 million barrels of oil per day when prices were at $60, and expects similar output at current prices along with a slight uptick in drilling activity.
Two operators have indicated they will add rigs, Anderson said. One is billionaire Harold Hamm’s Continental Resources, and the other is a private operator that will add one in July, Anderson said during a state media briefing in Bismarck. Rig counts are an indicator of future oil output.
There are 26 rigs operating in North Dakota, unchanged from May, the state regulator said. Twelve hydraulic fracturing crews are active, down one from the prior month. The regulator said it issued 93 permits to energy companies in May, versus 83 in April. Crude output fell slightly in April. North Dakota wells produced 1,137,155 bpd in April, down about 6,000 bpd from the prior month, which Anderson attributed to a slight decrease in the pace of well completion.
North Dakota’s oil and gas data typically lags by two months. The state relies heavily on tax revenue from the sale of oil and gas to fund infrastructure and projects.
“With permits up and with (hydraulic) frac crews steady and rig counts steady to increasing, I would not expect (oil) production to have a significant drop off at all. $75 oil is strong in my experience,” said Anderson, who has previously advised Chevron and spent close to two decades at PDC Energy.
(Reporting by Siddharth Cavale in New York; Editing by Mark Porter and Rod Nickel)