US oil and gas companies are accelerating well completions and boosting production in North Dakota, the nation’s third-largest oil-producing state, encouraged by high crude prices, state officials said on Tuesday.
“Operators are acting more quickly to move wells to production to capitalize on elevated oil prices,” Richard Suggs, a geologist with North Dakota’s Oil and Gas Division, said during a call to discuss the state’s August production data, the latest available.
US West Texas Intermediate futures topped $100 a barrel for the first time in nearly a month last week amid concerns that the Iran war could further tighten supplies. On Tuesday, WTI, the benchmark against which North Dakota crude is priced, was trading at around $102 a barrel. North Dakota crude traded at an average discount of about $4.21 a barrel to WTI through August, officials said.
The time between drilling and preparing a well for production has roughly halved since the start of the year, Suggs said. Wells are also coming online more quickly than normal, he added.
RECORD NUMBER OF PRODUCING WELLS
The faster pace helped push the state’s total producing wells to a record high of 20,177 in August, Suggs said.
There are 36 drilling rigs operating in North Dakota, up from 34 in September, with eight hydraulic fracturing crews active, according to state data. Oil production rose by 3,000 barrels per day to 1.161 million bpd in August.
However, the price gap between refiners on the US West Coast and East Coast has widened, according to the latest data collected, said Justin Kringstad, director of the North Dakota Pipeline Authority.
West Coast refiners paid about $93.51 per barrel for North Dakota crude, compared with $88.27 per barrel on the East Coast in July.
“This is the biggest spread I have seen in a little while,” Kringstad said, adding the differential is typically 50 cents to $1 a barrel.
Kringstad said East Coast prices are particularly sensitive to crude supplies arriving via waterborne imports, the US Gulf Coast and rail, and that disruptions to those flows may have contributed to the price gap.
Kringstad said refinery demand remains strong. Refinery utilization rates have eased, particularly in the Midwest, as plants enter the September-through-November maintenance season, but remain above 80%, he said.
(Reporting by Siddharth Cavale in New York Editing by Rod Nickel)