North Dakota shale activity slowly increasing, though some players are still waiting around for oil to hit $60 per barrel, state official said. Photo by David Gaylor/Shutterstock
BISMARCK, N.D., Sept. 19 (UPI) -- Oil and natural gas activity in shale-rich North Dakota is on a steady increase, though operators are still cautious about recovery, state data show.
State data show 32 rigs are actively exploring for or producing oil and natural gas in North Dakota, down one from last week but relatively in line with levels since July. Rig counts serve as a loose metric for investor confidence in the energy sector and a reflection of the appetite for spending from oil and gas companies.
Crude oil prices rallied earlier this year above the $50 mark on suggestions the gap between supply and demand had narrowed to the point of balance. Monthly market reports from the Organization of Petroleum Exporting Countries and the International Energy Agency said an expected balance had yet to materialize.
Lynn Helms, a director at the North Dakota Department of Mineral Resources, said in a statement that rig counts have seen a steady increase since June, though caution was the prevailing mood in state shale deposits.
"Operators remain committed to running the minimum number of rigs while oil prices remain below $60/barrel. ... Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the fourth quarter of this year and perhaps into the second quarter of 2017."
North Dakota oil production in July was around 1.03 million barrels per day, a slight increase from June, but still 16 percent below the all-time high set in December 2014. Natural gas production increased 2 percent in July, but was about 0.6 percent below the record high established in March.
Helms said drilling permit activity was moving higher in response to an expected recovery in crude oil prices by later next year.
"Operators have a significant permit inventory should a return to the drilling price point occur in the next 12 months," he said.