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ND Oil Production Up as DAPL Service Nears

Tuesday, May 16, 2017

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Oil production in North Dakota has seen a slight uptick during the early months of 2017 after last year’s lagging numbers, with a noticeable jump in rig count as operators prepare to put the Dakota Access Pipeline into service.

Some, though, are expressing concerns about DAPL itself—which experienced a small leak during commissioning activities last month—and about pipelines in general in the state, which has been the site of hundreds of spills in the past year.

Recent Stats

New numbers from the North Dakota Oil and Gas Division show that average daily oil production in the state rose back above one million barrels a day on average in February and March, after lagging below the one million mark for several months in late 2016 and 2017.

Oil well
© iStock.com/ChrisBoswell

The price per barrel of North Dakota crude was back up to $48.26 in February, more than double its price from a year prior.

Even more encouraging for the industry is the state’s average rig count for April, which rose to 50—its highest rate since January 2016. (Actual production rates for April will not be available until mid-June.) The slight growth in production numbers has some using the term “boomlet”—the state’s situation is nothing like it was a few years ago, but it’s looking more rosy for oil companies than it has in at least two years.

Earlier in the decade, it wasn’t unusual to have more than 200 oil rigs operating in the state at any given time; in 2014, the state’s average rig count was 190. But the industry saw a steep drop-off in 2015, with rig counts dropping under 100 in April that year and staying in the double digits since. The state bottomed out at an average rig count of just 27 last May before starting a slow recovery.

The price per barrel of North Dakota sweet crude also plummeted starting in 2015 after remaining in the $75 to $100 range throughout the early 2010s; it bottomed out in February 2016 at $22.72 per barrel before beginning its rebound. In February 2017, North Dakota crude was priced at $48.26 per barrel, according to the U.S. Energy Information Administration.

DAPL Nearly Ready

The Dakota Access Pipeline, nearly three years in the making, is set to go into service next month, according to Energy Transfer Partners, the company behind the pipeline. ETP is a partnership that has a number of subsidiaries and owns Sunoco Logistics, the owner of a number of oil and gas pipelines throughout the U.S.

The project was stalled late last year when the Army Corps of Engineers announced that it would not allow an easement for construction of the 30-inch pipeline underneath the Missouri River at Lake Oahe. The pipeline became a point of contention among environmental and Native American activists, who sought to stop the construction, which they said was too close to the water source for the Standing Rock Reservation.

DAPL map
Energy Transfer Partners

The Dakota Access Pipeline, nearly three years in the making, is set to go into service next month.

The Corps announced in February that it had reversed course, weeks after President Donald J. Trump ordered a reevaluation of the decision.

Last week, reports surfaced that Dakota Access had suffered a small spill, releasing 84 gallons of oil, during commissioning activities in early April. Reuters reports that, according to Energy Transfer Partners, the spill occurred within a containment area.

Many Spills, Many Contained

A recent report indicated that the state has had more than 700 oil spills in the last 12 months, a claim borne out by North Dakota Department of Health statistics. However, many of those spills were at well sites, and within containment: According to the state’s database of spills as of May 15, 517 spills at well sites in the past year were contained, while 187 were not. Of those not contained, some were as insignificant as one gallon of oil. Four are listed as having involved 50 barrels or more of oil.

The state lists fewer than 50 crude spills in the past year that occurred outside of the oil fields themselves, and of those, five involved at least 50 barrels. Those records include spills that occur at or around tankers and other facilities, in addition to pipelines.

Two ‘Significant’ Pipeline Incidents

According to the Pipeline Safety and Hazardous Materials Administration, North Dakota had two “significant incidents” involving crude oil pipelines in 2016, with a total of 12,765 barrels of oil spilled between them. The state’s number peaked in 2013 where “significant” spills are concerned, with nine incidents totaling more than 20,000 barrels spilled that year.

The PHMSA considered an incident to be “significant” if it involves a fatality or an injury that requires hospitalization; $50,000 or more in costs associate with it (in 1984 dollars), a liquid release of 50 barrels or more; or a liquid release that results in a fire or explosion.

One of those was the Dec. 4 Belle Fourche pipeline breach, in Billings County, which was initially estimated to have involved just over 4,000 barrels. That number was later revised to more than 12,000 barrels.

A nearby landowner reportedly notified authorities of the Belle Fourche leak, which was not detected by monitoring systems.

   

Tagged categories: Market; North America; Oil and Gas; Pipelines; Program/Project Management

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