With breakthroughs in drilling technology reducing costs and crude oil prices near $70 a barrel, wells in North Dakota are turning into cash cows.
The cost of getting oil and gas to the surface in North Dakota’s Bakken field has fallen, recently hitting $41 to $50 a barrel for the top-quartile wells in the region, according to a Bloomberg New Energy Finance report. Challenges still remain in the region, which is plagued by a lack of gas pipelines to take the fuel to more-promising markets, leading to an increase in flaring, the practice of burning the gas coming out of oil wells.
Technologies like fracking and horizontal wells, reaching lengths never before seen, have led to big reductions in costs across shale basins in the U.S. This has helped most average wells in the Bakken become economical. If West Texas Intermediate oil prices stay above $63 a barrel, all average wells will be “in-the-money,” BNEF analyst Jacob Fericy said in the report.
“The current upswing in prices we’ve seen, it’s really helped a lot of Bakken producers,” Fericy said by telephone. “The Bakken is definitely price-sensitive.’