Oil producers in North Dakota’s Bakken Shale are facing the lowest natural gas prices in nearly three decades, according to the state’s top regulator.
Department of Mineral Resources (DMR) Director Lynn Helms addressed the issue during a recent press conference.
The price of natural gas delivered to the Northern Border pipeline system at Watford City, ND, stood at $1.17/Mcf as of Thursday, the lowest price since June 1996, according to DMR. Farther downstream on the same system, NGI’s Daily Northern Border Ventura price averaged $1.365/MMBtu on Tuesday (Feb. 20).
The low prices are “going to make investment in natural gas…transmission, gathering and processing really, really difficult,” Helms said.
The advent of electric fracturing (e-frac) completions in the Bakken could boost in-basin demand for gas-fired power generation, Helms said.
He noted that oilfield services giant Halliburton Co. is planning to deploy at least one e-frac fleet in North Dakota, with artificial intelligence “actually running the frac pumps.” As a result, “they’re able to pump 23 out of 24 hours in a day...while they’re fracking on a pad,” Helms said. “Now the thing about that is that an e-frac fleet places a 30 to 36 MW demand on the grid when you drop it in there.”
With the local power grid maxed out, “we’re going to have to use some of our natural gas, that ultra cheap natural gas that we have now, to generate electricity.” Helms also highlighted that the Basin Electric Power Cooperative is building a 580 MW gas-fired power plant near Williston, ND, to serve the Bakken region.
Helms said North Dakota operators are excited to move more Bakken natural gas to the Cheyenne hub in Wyoming, “and then further south and west.” NGI’s Daily Cheyenne Hub price averaged $1.295/MMBtu on Friday.
Helms added, “It is Mexico and the southern markets, and the growing gap between production and demand in California, that really are driving some new homes…for North Dakota natural gas.”
Helms was joined by Justin Kringstad, director of the North Dakota Pipeline Authority, who noted that Hess Midstream LP is planning to bring online 125 MMcf/d of gas processing capacity in the state by 2027, which could help alleviate takeaway constraints. “We know that’s not the end-all be-all, but it’s encouraging to see things discussed publicly,” said Kringstad.
Natural gas production in North Dakota averaged 3.52 Bcf/d in December, versus 3.47 Bcf/d in November. Producers managed to capture and market 95% of the gas produced, in line with November’s capture rate.
Regulators permitted 78 wells in January, versus 57 in December and 51 in November.
The state’s rig count stood at 37 as of Feb. 15, compared to monthly averages of 36, 36 and 38 in November, December and January, respectively.
The tally of drilled but uncompleted wells stood at 331 as of December, versus 345 in November.
There were 13 hydraulic fracturing crews active in the state as of last Thursday (Feb. 15), Helms said, down from 17 at the same time in January.
Looking ahead, Helms said that operators “see the Bakken as somewhat of a cash cow, and also a slow growth opportunity. Their inventory varies from four or five years of drilling inventory to as much as 18…I think a really good gauge of that is the merger and acquisitions activity, and it is just continuous…and there’s going to be more of that in 2024.”
He added that, “The Bakken is far, far from over,” and “in fact continues to lead the way with a lot of these technology developments…”
In addition, “our operators believe there is a lot of unstimulated reservoir in the Bakken.”
