The North Dakota Department of Mineral Resources released their latest rig count and oil production numbers last week, and the on-going plateau in oil production prompted some media outlets to resort to some pretty sensational reporting.
“The shale boom in North Dakota has softened to a whisper,” reported Dan Murtaugh for Bloomberg.
“Proof that the shale boom is practically over keeps growing,” wrote Akin Oyedele for Business Insider.
“Cheap Oil Is Devastating North Dakota’s Shale Industry,” wrote Steve Birr for the Daily Caller.
The truth is that oil production really hasn’t fallen off all that much, and even the rapid decline in the number of drilling rigs seems to have moderated. Here are the latest production/rig count numbers from the DMR:
That’s hardly a picture of a “sky is falling” situation. In fact, the real story here is just how remarkably resilient Bakken shale oil production has remained even amid low oil prices. The all-time record for daily oil production in the state was 1,227,483 barrels per day in December 2014. In September the state produced 1,162,253 barrels per day, or just a 5.3 percent decrease.
To be sure, we’re going to continue to see a fall off in production if oil prices don’t recover. The oil companies will keep stacking rigs, and production will follow that slowdown in drilling activity.
But this isn’t a bust. As someone in the energy industry told me recently, it’s worth remembering that when oil prices crashed in the 1980’s the rig count in North Dakota dropped like a rock to zero. Today it seems oil prices have hit bottom, and we’ve still got dozens of rigs operating.
What the state really needs is more pipeline infrastructure, to lower the costs associated with bringing North Dakota oil to market, and a lift of the oil export ban so that the market state oil producers serve is larger.