North Dakota oil output stays high even as rigs go idle

North Dakota's oil production slid for the second month in a row in February as falling crude prices zapped producers' incentives to keep the spigots fully open, according to data released on Tuesday by the state's Department of Mineral Resources.
North Dakota continues to pump out oil at a pace near its all time high hit in December. But that's unlikely to last as more and more drillers have stopped new activity until prices return (Pete Evans/CBC)

North Dakota's oil production slid for the second month in a row in February as falling crude prices zapped producers' incentives to keep the spigots fully open, according to data released on Tuesday by the state's Department of Mineral Resources.

Even more ominous for the No. 2 U.S. oil producer: While the number of producing wells in the state's four most prolific counties jumped during February, the amount of oil output dropped in each of them.

Shale, the major source of the state's oil, is a notoriously fickle rock, and new wells must be constantly tapped to maintain output. But producers have been loath in recent months to launch the same number of wells they did last year, with many preferring (or being forced to) scale back spending amidst a more than 50 per cent drop in oil prices since last summer.

North Dakota produces more oil than all but one U.S. state. (Hasan Jamali/Canadian Press)

That's a sign, of sorts, that North Dakota's oil production may never again touch levels reached last December, an all-time production high.

North Dakota pumped 1,177,094 barrels per day in February, down about 1 percent from January levels, according to the data. The month of January had three more days than February.

Slowdowns elsewhere

The forecast is looking glum elsewhere in the state, outside the Bakken formation. Oil production from major U.S. shale plays is forecast to decline by almost 60,000 barrels per day between April and May according to new estimates from the Energy Information Administration.

Production is expected to decline in the Bakken, Niobrara and Eagle Ford plays next month. Only the Permian Basin is expected to post a small month-on-month increase in output.

With the number of rigs drilling for oil in the United States down by almost 53 per cent in just six months, according to oilfield services company Baker Hughes, the shale boom appears to be approaching a turning point.

The crude market remains substantially oversupplied as a result of past production, but the degree of excess supply should narrow in the coming months.

With files from CBC News

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