ND Oil Industry Keeping an Eye on OPEC

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Bismarck – Oil production remains high, but there is a lot of uncertainty surrounding the industry.

The Department of Mineral Resources released March’s production numbers Friday. For the second month in a row, North Dakota produced more than a million barrels a day with prices teetering above and below $50 a barrel.

But numbers could drop eventually. Companies are nervous after the senate’s recent failed vote to repeal an Obama-era rule that limits flaring. Senator Heidi Heitkamp was one of the deciding votes in a decision that could have a large economic impact on North Dakota when new flare limits take effect in January.

“The state could take somewhere in the neighborhood of a $150 million per year hit in terms of royalties due to decreased activity and shift of operators,” Dept. of Mineral Resources Director Lynn Helms said.

And that is not the only thing making investors nervous.

This year’s strong start is in part thanks to a temporary production cut by OPEC. However, OPEC will meet in a couple weeks to decide whether it should reverse the cut. If they do, Bakken oil prices could drop to $35 per barrel.

“Low to mid 30’s for a drilling rig count. Back to a thousand incomplete wells and companies just saying it’s not worth investing and it’s not worth producing at this low price,” Helms said.
 
The rig count is up slightly this month at 51, but growth was limited because of activity down south in the Permian Basin.

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