Wednesday, February 08, 2012

North Dakota Oil Production Sets Another Record in December, Will Likely Pass CA and AK In Months

At the current rate of monthly increases, North Dakota could be the No. 2 oil producing state within months.
The "Economic Miracle State" of North Dakota pumped another record amount of oil during the month of December at a daily rate of almost 535,000 barrels, which was 55% above its output from a year earlier, and only the second time that the state's daily production exceeded 500,000 barrels (see chart above, data here). Oil production in the Peace Garden State has more than doubled from 246,000 barrels per day two years ago, and North Dakota is now producing enough oil to completely displace the imports of crude oil from Colombia (364,000 bpd) or Iraq (422,000 bpd).

Other highlights of today's December production report:

1. The number of wells producing oil in the state increased to 6,211, setting a new record.

2. The amount of oil produced per well also reached a record high of 86 barrels per day in December, which is 56% higher than the 55 barrels per day two years ago, and probably reflects both increasing productivity from fracking technology and drilling in more productive areas.

3. The combination of a record number of wells producing oil at record-setting productivity levels has put North Dakota on a trajectory to surpass both California (543,000 barrels per day) probably last month in January and Alaska (555,000 bpd) in February to become the No. 2 oil-producing state in the U.S. early this year At the current pace of record-setting monthly gains, North Dakota's oil production is currently on track to break the 600,000 barrels per day level by March, break the 700,000 level by next August, and exceed 800,000 barrels per day by the end of this year. At that point, North Dakota oil could be enough to displace either Venezuela's or Nigeria's imports.

4. North Dakota's oil production has now surpassed OPEC-member Ecuador's daily production of 485,000 barrels.

As a result of the ongoing oil boom in the Bakken area, North Dakota continues to lead the nation with the lowest state unemployment rate at 3.3% for December, five full percentage points below the nation's average 8.3% rate for December. There are 16 North Dakota counties with jobless rates at or below 3% for December, and Williams County, which is at the center of the Bakken oil boom, boasts the lowest county jobless rate in the country at just 1%.

Bottom Line: The ongoing record-setting oil production in North Dakota continues to make it the most economically successful state in the country, with record levels of employment and income growth, increasing tax revenues, the lowest foreclosure rate in the country, a strong real estate market, and jobless rates in many counties of the Bakken region below 3%.

24 Comments:

At 2/08/2012 6:15 PM, Blogger Hydra said...

What is the ratio of jobs per million barrels of oil in North Dakota vs Jobs per million barrels of oil in Qatar?

 
At 2/08/2012 6:51 PM, OpenID moneyjihad said...

Dunno, Hydra. But at least we know that North Dakota won't be hosting the Taliban's new office like Qatar will.

 
At 2/08/2012 7:26 PM, Blogger Buddy R Pacifico said...

"Bakken crude priced at Minnesota's Clearbrook terminal dropped 24% year-to-date to close at $72 per barrel Monday(2-6-2012)"

Why have Bakken crude prices dropped so dramatically?

Congestion in pipeline capacity, "as production growth has exceeded infrastructure development".

 
At 2/08/2012 8:16 PM, Blogger juandos said...

From the Bismark Tribune: Walmart gives oil workers 24 hours clear out of Williston parking lot

Blog site claims to have a Google map photo of the lot full of campers...

This doesn't answer hydra's question but maybe its an indicator of how many work and of many more want to work...

 
At 2/08/2012 8:26 PM, Blogger juandos said...

"Congestion in pipeline capacity, "as production growth has exceeded infrastructure development"....

Whoa! Hold on a sec there buddy, that can't be right can it?

“Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.”...

LMAO!

 
At 2/08/2012 8:47 PM, Blogger Benjamin said...

“Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.”...

That's interesting. Hitherto, the Keystone was presented as a necessity--so necessary that rancher and farmer property rights meant nothing, the pipeline would be rammed through over their objections, for private-sector profit.

Now we hear there is an alternative.

 
At 2/08/2012 8:54 PM, Blogger Benjamin said...

The Economic Miracle state also receives $4,377 per capita in net--that's net over taxes received--federal spending, and that was a few years back, according to the far-right Tax Foundation.

See http://taxfoundation.org/taxdata/show/22685.html

So when a family of four stouts down in North Dakota, there is more than $16k of federal taxpayer money on the table. The ND boom coincides with very heavy federal spending that almost certainly boosted the net figure way up. By now they are probably to $6k net per capita or more.

It would be interesting to compare net federal outlays against oil revenues for North Dakota to see which is providing more stimulus.

I much prefer the oil drilling kind of stimulus, btw.

 
At 2/08/2012 9:41 PM, Blogger Buddy R Pacifico said...

Juandos,

There are capaicity constraints with RRs that will have to be worked through.

"Enbridge Energy Partners L.P. announced plans to spend an additional $145 million to enhance the capability of its North Dakota crude-oil distribution system in the Bakken Shale region. The project calls for expanding capacity at a BNSF Railway Co.-served terminal near Berthold, N.D., by 80,000 barrels per day (bpd) and constructing a rail-car loading facility to accommodate additional volume...

The rail facility will be designed to stage three unit trains at a time. The full 80,000-bpd of rail export capacity is scheduled to be in service in early 2013."


RR capaicity needs to be built at refineries also.

Bakken oil is coming on fast and furious.

 
At 2/08/2012 9:43 PM, Blogger Buddy R Pacifico said...

Source, BNSF Railway Co. and Enbridge terminal by 2013.

 
At 2/09/2012 5:05 AM, Blogger rjs said...

how about side by side charts of AK & ND production?

 
At 2/09/2012 10:04 AM, Blogger Jon Murphy said...

What is the ratio of jobs per million barrels of oil in North Dakota vs Jobs per million barrels of oil in Qatar?

Well, hopefully it'll be lower here than in Qatar. More productive workers mean lower prices!

 
At 2/09/2012 12:18 PM, Blogger morganovich said...

"Now we hear there is an alternative."

yeah, an expensive and less safe one.

this isn't an "alternative", it's a special interest payoff to buffet. ooh, let's do it the hard way and pay off our supporters!

buffet has become an outlandish rent seeker.

this is the same playbook as barracking for higher cap gains taxes to boost BH's flagging life insurance business. (life insurance is mostly a wealth management tool for the rich to work around inheritance tax)

 
At 2/09/2012 12:23 PM, Blogger Paul said...

Benji,


"the pipeline would be rammed through over their objections, for private-sector profit."

Here's a map of all the pipelines criss-crossing the United States. Luckily, your boyfriend wasn't in office when these were being "rammed through."

http://www.theodora.com/pipelines/united_states_pipelines_map.jpg


Douche.

 
At 2/09/2012 12:24 PM, Blogger Paul said...

Map.

 
At 2/09/2012 12:30 PM, Blogger Jon Murphy said...

Paul,

I think Benjimin's objection (and please correct me if I'm wrong) is not with the pipeline per se, but rather with the use of eminent domain, which is a perfectly reasonable objection.

 
At 2/09/2012 12:43 PM, Blogger Paul said...

Jon,

Benji can't find a way to blame the GOP on this one, so he resorts to back door damage control for his boyfriend. Watch his comments here and you'll see the same stupid tactics over and over and over and over....

 
At 2/09/2012 2:48 PM, Blogger Jon Murphy said...

Regardless, Paul, I see no such malice here. All I read was him objecting to the sense of "urgency and all else be damned" that was surrounding Keystone. I think it's a perfectly reasonable objection, regardless of what side of the aisle one may fall on.

I mean, surrounding Keystone, you had those on the right crying "we need the jobs now, so approve it and we'll take any land we need through eminent domain." On the left, you have those crying "block this immediately or Dick Cheney and Haliburton will rape our land!" In both cases, there are extreme violations of people's rights.

 
At 2/09/2012 4:26 PM, Blogger Paul said...

Jon,

Look at the map of current pipelines in the US. If it were really that big a deal, they wouldn't exist. Besides, most of these pipelines are under ground.

Again, Benji is just looking for any way to absolve his communist boyfriend.


you had those on the right crying "we need the jobs now, so approve it and we'll take any land we need through eminent domain."

Really? Can you cite one source for that claim? I mean in those exact Stalinesque words.

 
At 2/09/2012 5:06 PM, Blogger Jon Murphy said...

Really? Can you cite one source for that claim? I mean in those exact Stalinesque words.

Of course not in those exact words, I was being dramatic to prove my point. But eminent domain was going to me used.

Look, all I am saying is I think you overreacted to what he said, that's all. I'm not saying he's right or your right or anything. I'm just saying that, based on what he said, I think your reaction was...well...kinda childish.

 
At 2/09/2012 6:01 PM, Blogger morganovich said...

paul-

and the fact is that benji has a point there.

keystone was playing an incredibly nasty game around eminent domain.

they were being as threatening and intimidating as they could figure out how to be and using every nasty trick they could think up including having land condemned.

they initiated nearly 60 actions in court before even getting approval for the pipeline.

that's some pretty heavy handed behavior. i'd be livid if they tried it on me.

sure, eminent domain exists for a reason, but we need to be very careful about using such a power. even if it is a necessary evil, it's still an evil and anathema to property rights and liberty.

 
At 2/09/2012 7:13 PM, Blogger Larry G said...

I'm looking at the map Paul provided and wondering why the existing routes cannot be used by enlarging existing are adding dual pipes.

why is a brand new route needed?

 
At 2/09/2012 7:15 PM, Blogger Larry G said...

This comment has been removed by the author.

 
At 2/09/2012 8:24 PM, Blogger juandos said...

"That's interesting blah, blah, blah"...

Ahhh, clueless pseudo benny, truly clueless...

"There are capaicity constraints with RRs that will have to be worked through"...

buddy no matter how you cut it, rail will never be as cheap as a pipeline...

Still I grant you there will be the need for more rail capacity...

 
At 2/11/2012 10:44 PM, Blogger VangelV said...

1. The number of wells producing oil in the state increased to 6,211, setting a new record.

That explains the increase on its own. If you keep drilling enough $5 million wells that have a high IP you don't have to worry too much about the decline rates for a while.

2. The amount of oil produced per well also reached a record high of 86 barrels per day in December, which is 56% higher than the 55 barrels per day two years ago, and probably reflects both increasing productivity from fracking technology and drilling in more productive areas.


No, it reflects the high IP and the very high depletion rates. You are looking at more than 1,800 new wells being drilled even as old low-production wells were taken off line. A productive new well has an IP rate of more than 1,200 bpd. Yet the depletion rate was so high that nearly 2,000 new wells could not bring up the production rate over 100 bpd. (I am assuming that 200 wells were shut down. That number may be low but we do not have enough good data that is easily available to get the exact figures. That said, the numbers are close enough to make the point.)

Now I know that you can do the math Mark. The total well number tells us a very interesting story that you have refused to pay attention to. And is that 535,00 number boe? If it is, as I suspect, the production figure is based on the energy equivalence instead of the price equivalence. Depending on the composition of the total output the price ration could make the number much lower than what is being reported.

My question is this? How do you make money drilling $5 million wells when production output is that low and there are other costs that have to be accounted for?

3. The combination of a record number of wells producing oil at record-setting productivity levels has put North Dakota on a trajectory to surpass both California (543,000 barrels per day) probably last month in January and Alaska (555,000 bpd) in February to become the No. 2 oil-producing state in the U.S. early this year...

California has many old vertical stripper wells that were cheap to drill and can still be economic while producing a few barrels of oil a day. (About 20% of American production comes from such wells and around 85% of all wells in the US are stripper wells.)

The Prudhoe Bay Field provided more than 1.5 mbpd from around 1000 vertical wells. In the 1970s the oil bearing sandstone areas were around 600 feet, far thicker than the low-porosity, low-permeability shale in ND. The numbers, if you choose not to ignore them, show an expensive, low-productivity operation that suffers from high costs and very high depletion rates. The production rate is going up because companies are willing to destroy capital, not because the returns are acceptable. If the currency falters and rates go up more than 90% of the operations in the shale space will go bankrupt.

 

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