US crude oil output in North Dakota posted a record decrease of 41.6% between December 2019 and May 2020, down from an average of 1.5 million barrels per day (b/d) to 0.9 million b/d, the country's Energy Information Administration (EIA) said in a statement on Friday.
This production decline of more than 615,000 b/d, the agency said, “is greater than it would have been if producers solely halted new drilling and allowed production from current wells to naturally decline.”
With only natural declines, crude oil production for most of North Dakota would have been approximately 1.1 million b/d in May 2020, 0.4 million b/d more than those wells actually reported, according to the EIA.
The agency concluded that the difference suggests that many producers decided to reduce production from their existing wells beyond the volume the wells would have naturally declined.
The EIA attributed the main driver of North Dakota’s production decline to “low crude oil prices.”
After averaging $55.70 per barrel (b) throughout 2019, monthly prices in North Dakota averaged $29.82/b in May 2020 after having declined as low as -$38.13/b on April 20.
According to survey data from the Federal Reserve Bank of Dallas, the region’s producers need prices of at least $28/b on average to cover their operating expenses and $51/b to drill new wells.
The EIA said in response to the low prices due to the unprecedented coronavirus pandemic around the world, some producers halted production completely, some of them stopped or reduced drilling new crude oil wells and some others opted to reduce, but not completely halt, production from some of their wells.
By Sibel Morrow