On Wednesday the North Dakota Industrial Commission decided not to intervene in the oil market. This was the outcome analysts expected after states like Texas and Oklahoma voted against enforced production curtailment.
During the oil waste hearing, Continental Resources urged commissioners to help individual producers curtail efficiently. They argued that current production exceeds reasonable market demand and therefore qualifies as ‘economic waste.’
Several organizations pushed back and asked regulators not to intervene. Representatives from API, North Dakota Petroleum Council and North Dakota’s Department of Public Lands testified against declaring mandated curtailments and asked the Commission to allow market forces to have their effect.
STATE INDUSTRY REACTS TO MARKET
In North Dakota, a third of the state’s production has been shut in due to the significant reduction in oil demand and lower prices. Current output is estimated at 950,000 barrels per day, a drop of nearly half a million barrels per day since February. Market turmoil has driven oil production activity from 25 fracking crews and 55 rigs to one fracking crew and 12 rigs.
The state has implemented measures to facilitate restarting wells and drilling programs once market conditions stabilize. In late March the state created a waiver to assist producers by allowing wells to remain in non-completed or inactive status longer than regulations normally allow. The waiver expires when crude oil prices (WTI) exceed $50 per barrel for 90 days.
North Dakota has also sought collaboration from state offices and subject matter experts to create the Bakken Restart Task Force. The report gives an overview of current oil and gas production and focuses on regulatory relief, economic stimulus and proposals to restart the Bakken.