North Dakota’s oil production contained its highest share of associated natural gas in history during June, according to state regulators.
The statewide gas-to-oil ratio (GOR) in June averaged 2.95 Mcf of natural gas per bbl of oil produced, topping the previous record of a 2.93 Mcf/bbl ratio in May, according to North Dakota Pipeline Authority Director Justin Kringstad.
June’s figure “is the highest we’ve had in development history here,” Kringstad said during a press briefing on Thursday (Aug. 15). “We’re going to see ups and downs with this trend, but the general consensus is we’re going to see this continue to move up and to the right as these wells age.”
He likened associated gas to the bubbles in a can of soda, explaining that, “in order to develop that Bakken barrel of oil, you’re going to get the natural gas that comes with it.”
Kringstad said that as oil wells age, “that pressure depletes [and] we see more and more gas released downhole and that GOR continues to move upward … From an infrastructure standpoint this is something that we’re continuing to plan for and monitor.”
He highlighted the Wahpeton Expansion natural gas pipeline slated to enter service by year-end, as well as Kinder Morgan Inc.’s newly announced plan to convert the Double H crude oil pipeline to a natural gas liquids pipeline, as projects that should help accommodate rising gas production in the Bakken Shale.
Since Bakken natural gas is among the most liquids-rich in the country, the Double H conversion “is going to provide some additional breathing room…this is certainly a big win for the basin as we continue to look at natural gas infrastructure on a holistic basis all the way from the gathering, processing, transmission, the residue [gas] that you typically talk about, and then the natural gas liquids, that component as well,” Kringstad said. “All of those need to be aligned moving forward.”
The rising GORs come amid a stubbornly oversupplied natural gas market in North America. Forward basis prices for September delivery at NGI’s Northern Border Ventura location, a useful proxy for Bakken natural gas prices, averaged minus-37.5 cents on Friday (Aug. 16).
North Dakota’s statewide natural gas production averaged 3.47 Bcf/d in June, down 1.1% from May, while oil production dropped 1.9% to 1.18 million b/d.
Producers captured and marketed 94% of the gas production in June, versus 95% in May.
Assistant Director of Mineral Resources Mark Bohrer, who joined Kringstad at the press conference, said that some gas processing plants were offline during June, which led to a slight uptick in flaring.
The state’s rig count stood at 37 as of Thursday after averaging 39 in July. The tally of drilled but uncompleted wells stood at 372 as of June from 339 in May, “so hopefully when those come online that will contribute to an increase in our production,” Bohrer said.
The number of wells permitted, meanwhile, spiked to 107 in July from 78 in June. Well completions rose to 79 in July from 55 in June, based on preliminary data, “so that’s a nice uptick,” Bohrer said. “We need about 90 to 100 per month to grow our production.”
