North Dakota energy sector facing market headwinds that could last into the third quarter, state report finds. Photo by David Gaylor/Shutterstock
BISMARCK, N.D., May 13 (UPI) -- North Dakota crude oil production dropped about a full percentage point over the course of a month because of lingering market pressures, a regulator said.
State data show oil production in March, the last full month for which figures are available, at 1.11 million barrels per day, a decline of about 1 percent from February. The all-time high was 1.23 million bpd reported in December 2014.
North Dakota is the No. 2 oil producer in the United States, hosting a significant portion of the Bakken shale oil reserve area. More than 90 percent of the oil production in North Dakota comes from that region.
Lynn Helms, the director of North Dakota's Oil and Gas Division, said energy companies working in the state are committed to running only a small number of rigs while crude oil prices remain below $60 per barrel. The price for West Texas Intermediate, the U.S. benchmark price for crude oil, was around $46 per barrel early Friday.
"Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the third quarter of this year and perhaps into the second quarter of 2017," he said in a statement.
The state government attributed the decline in crude oil prices to weakening in the Chinese economy and the lifting of sanctions on Iran. Low crude oil prices leaves energy companies with less capital to invest in exploration and production activities.
The total number of rigs actively exploring for or producing oil and natural gas in the state is at its lowest point in more than a decade.
In early May, North Dakota Gov. Jack Dalrymple called for a state budget that was about 90 percent of the 2015-17 appropriation. Tax revenues are falling short and the budget situation in the state is much different than it was two years ago when oil was selling for more than $100 per barrel, he said.