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‘A five-alarm fire for North Dakota’s oil and gas industry’


Mike Lee, E&E News reporter

North Dakota’s oil production fell by a record-setting 30% from April to May as the pandemic cut into demand for fuel, a drop that could crimp the energy-dependent state’s budget and take more than a year to make up.The drop from 1.2 million barrels a day to 858,000 barrels a day was the state’s worst-ever month-over-month decline. It also was the second record slide in as many months, after production declined 15% from March to April. The last time North Dakota’s production was below 1 million barrels a day was January 2017.”The second quarter of 2020 was a five-alarm fire for North Dakota’s oil and gas industry,” state Mineral Resources Director Lynn Helms said on a conference call.The North Dakota statistics underscore how the coronavirus outbreak, which led to quarantines and stay-at-home orders around the world, is continuing to affect oil-producing states. In Texas, the number of drilling permits fell by two-thirds in June compared with the same month a year ago.

Nationally, the number of onshore oil and gas rigs declined to 253 on Friday, compared with 258 the week before, according to Baker Hughes Co. The rig count has fallen every week since March 6.

In North Dakota, Helms said, producers could also be hurt by the court-ordered shutdown of the Dakota Access pipeline. The shutdown was stayed by an appeals court, but if it goes back into effect, it could dampen prices for crude from the state’s Bakken Shale oil field (Energywire, July 15).

State government agencies have been asked to prepare for 15% budget cuts when the state Legislature convenes in January, Helms said.

The price of oil, which briefly turned negative in April, began to recover in May and has since leveled off around $40 a barrel. That’ll help some of the state’s producers, Helms said, but it could take until the fourth quarter of 2021 for North Dakota’s oil production to recover to pre-pandemic levels.

And even that prospect isn’t guaranteed, he said.

“I think we’re going to see a permanent shift in the world’s demand” for oil, he said.



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