North Dakota oil production dropped a tad in June as oil prices fell, but it remained above the 1 million barrel-per-day level.
Meanwhile, with the Dakota Access pipeline coming online in June, the share of oil shipments out of North Dakota by rail dropped below 10 percent from over 25 percent earlier this year.
North Dakota, the nation’s second largest oil-producing state, pumped out 1.03 million barrels per day in June, down 1 percent from the previous month, according to data released Friday by the North Dakota Department of Mineral Resources.
Lynn Helms, the department’s director, said he expects production to remain steady over the next couple of months, despite relatively soft oil prices.
“July looks solid with over 1 million barrels per day, and August is shaping up to be very similar,” he said.
West Texas Intermediate, the benchmark U.S. crude oil price, closed around $48.80 per barrel Friday. WTI prices have generally been below $50 for the last 10 weeks, though they have rallied from late June when they dipped below $42 per barrel.
OPEC nations haven’t been fully complying with planned output cuts, while production has been rising from the hottest U.S. shale oil play, the Permian Basin in Texas and New Mexico. Together, those production trends have kept a lid on prices.
The oil rig count in North Dakota, after growing for several months, dipped in August. A rising rig count is a sign of increasing oil field activity, as operators drill more wells.
The number of drilling rigs operating in North Dakota rose from 50 in May to 55 in June and to 58 in July — but was down by one as of Friday. The rig count topped out in North Dakota at 218 in May 2012; after the oil bust, it fell below 30 by early 2016.
June marked the first month that the controversial Dakota Access pipeline was in full operation.
The 1,172-mile pipeline, which triggered large protests from American Indian and environmentalist groups last fall, transports crude oil from North Dakota to a terminal in southern Illinois.
“For the first time in June we have a enough pipeline capacity,” said Justin Kringstad, director of the North Dakota Pipeline Authority.
With the arrival of Dakota Access, pipelines carried 78 percent of North Dakota’s oil to market in June, while railroads’ share was only 7 percent, according to data released Friday by the pipeline authority. (The remaining 15 percent was either refined in North Dakota or trucked to Canada for further transport by pipeline.)
In March, pipelines captured 58 percent of the oil transportation market in North Dakota, compared with 27 percent for railroads. In June 2015, railroads had the leading market share of 47 percent, compared to 46 percent for pipelines.
Pipeline capacity grew gradually, and then spiked with the high-volume Dakota Access’s arrival.
Mike Hughlett • 612-673-7003