Natural gas prices in North Dakota continue to languish at nearly 30-year lows amid nationwide oversupply, according to the state’s top oil and gas regulator.
Production cuts announced by large operators in the gassy Marcellus and Haynesville shales have so far failed to meaningfully boost prices.
“We’re seeing rigs lay down in the natural gas plays, the Marcellus and the Haynesville, like there’s no tomorrow,” Department of Mineral Resources’ (DMR) Lynn Helms, Oil and Gas Division director, said during a press briefing.
The price of natural gas delivered to the Northern Border Pipeline at Watford City, ND, stood at $1.13/Mcf as of Thursday, down from $1.17 a month earlier and the lowest level since June 1996, he said.
NGI’s Northern Border Ventura price averaged $1.160/MMBtu on Thursday.
Helms noted that U.S. natural gas storage inventories were 37% above the five-year average.
North Dakota producers engaged in some production cuts of their own, albeit involuntarily, amid fierce winter weather in January.
Natural gas production plunged 15% month/month to average 2.80 Bcf/d in the first month of 2024, as production was shut in due to the extreme weather. The gas capture rate dipped to 93% from 95%, which was still above the state’s goal of 91%.
Helms explained that, “when we get those really sudden winter storms, it’s gas capture that controls everything. In the previous life, pre-2014, the wells would have gone to flare and just kept producing oil. But in today’s world, the very first thing to happen is that the gas gathering systems fill up with liquids when it gets really cold like that, and then the restriction in gas gathering and gas processing ripples back and wells get shut in or curtailed in order to maintain above the 91% gas capture number.”
As gas-to-oil ratios continue to rise in the Bakken Shale, gas takeaway capacity remains an acute challenge, said North Dakota Pipeline Authority Director Justin Kringstad, who joined Helms at the press conference.
He said the 430,000 Dth/d Bakken Xpress/Bison Xpress pipeline project would be “absolutely critical” for the state’s oil and gas production to keep growing. The project, which entails reversing the flow direction on an existing system from the Bakken to the Cheyenne hub in Wyoming, is slated to enter service in the first quarter of 2026.
Helms said that demand for onsite, gas-fired power generation to run electric fracturing (e-frac) fleets in the Bakken should provide a much needed outlet for associated gas as well as e-frac becomes more prevalent.
Oil production showed a similar decline in January, dropping 13.5% versus December to 1.10 million b/d.
The number of wells permitted in the state totaled 63 in February, from 78 in January and 57 in December.
North Dakota’s rig count stood at 38 as of Thursday, which also was the monthly average for January and February.
The drilled but uncompleted (DUC) well count fell to 284 in January from 331 in December.
Well completions totaled 92 in February, from 102 in January, based on preliminary data.
There were 13 hydraulic fracturing crews active in the state as of Thursday, Helms said, the same amount active around this time in February.
