The oil industry no longer sees North Dakota as a growth market.
That was the word Monday from the state’s mineral resources director, Lynn Helms, recalling a recent round of visits with oil executives in Houston.
“The Bakken has been rebranded — whether we wanted it to be or not — as mature,” Helms said.
It’s not that the industry is backing away from North Dakota. Companies still see the state’s oil fields as “cash cows” and solid producers, Helms told reporters Monday during a monthly call to discuss production.
“But they are not reinvesting that revenue in [capital projects],” he said.
The Permian Basin in Texas and New Mexico is the only U.S. shale oil play that the industry sees as a growth market, he said.
Indeed, the Permian hit a new monthly oil production record in December of 4.92 million barrels a day, topping its previous high set in March 2020 when COVID-19 began spreading.
In North Dakota, oil output hit 1.14 million barrels per day in December, down 2% from the previous month and well below the all-time high of 1.52 million barrels per day in November 2019.
The state’s natural gas production fell 3% in December from the previous month.
And the number of drilling rigs in North Dakota — an indicator of new production — currently stands at 33, the same as it was in November.
With oil inventories low and demand outstripping supply, oil prices rose in 2021 to levels not seen since 2014. Now, with the crisis over Ukraine further rattling oil markets, the benchmark U.S. crude price — West Texas Intermediate — is hovering near $95 per barrel.
Prices like that usually spur a drilling offensive in U.S. shale oil fields.
“But with the rebranding of us as mature, that is not in the plan,” Helms said.