North Dakota oil production was flat in February — despite high crude prices — and output is expected to grow only slightly this year.
Limited partly by weather, North Dakota pumped out 1.09 million barrels of oil a day in February, about the same as the previous month, according to state data released Tuesday. Natural gas production rose 1.5 % from January to February.
"The weather was bad, production was not too bad and the prices were amazing," Lynn Helms, North Dakota's mineral resources director, told reporters Tuesday.
North Dakota light sweet crude stood at $86 per barrel on average in February, well above the state's oil tax revenue forecasts. Today, that price is around $110, boosted by Russia's invasion of Ukraine.
While oil prices have been strong for at least six months, production in North Dakota has been sluggish.
Since disruptions caused by the pandemic caused U.S. oil output to crash in 2020, the industry's recovery since has been led by the nation's largest and most cost-efficient shale oil patch: the Permian Basin in Texas and New Mexico.
In North Dakota, the drill rig count — a key indicator of new oil production — rose in recent months, a good sign. Today, there are 38 rigs working in the state, up from 34 last month and 31 in January.
Still, North Dakota's oil production is expected to grow conservatively in 2022. Helms said oil companies have told him they expect 1 to 2 % growth, but not until the third quarter.
Oil drillers and frackers are partly limited by constraints from their shareholders and the labor market, Helms said.
"It is difficult to get a workforce," he said. "It is difficult to get capital."
A lot of oil field workers left the state during the COVID-19 downturn and have not returned.
Oil field operators "have increased hourly wages by $10 an hour, and that has not flipped the switch," Helms said. "We are going to have to train our North Dakota youth to be our workforce."
The drilling pullback in North Dakota has primarily come from publicly traded oil and gas companies.
"Our privately owned companies have gone back to their pre-pandemic production levels," Helms said. They're financing their drilling and fracking operations from cash flow, which is very strong given high oil prices, he said.
