ND becomes nation's second-leading oil producer

May 15, 2012 - 8:15 PM

BISMARCK, N.D. (AP) — North Dakota has passed Alaska to become the second-leading oil-producing state in the nation, trailing only Texas, state officials said Tuesday.

North Dakota oil drillers pumped 17.8 million barrels in March, with a daily average of 575,490 barrels, Assistant State Mineral Resources Director Bruce Hicks said. That compares with 17.5 million barrels in Alaska, though still far behind Texas.

The state's oil patch is drilling at record levels and shows little sign of slowing down. The 152.9 million barrels of crude oil produced in 2011 set a record, surpassing the previous year's mark by nearly 40 million barrels, according to the state Industrial Commission. The number of wells in the state jumped from 6,726 in February to a record 6,921 in March, Hicks said.

North Dakota owes its rapid rise from No. 9 in just six years to improved horizontal drilling techniques in the rich Bakken shale and Three Forks formations in the western part of the state.

"No. 2, who would have thought?" said Ron Ness, president of the North Dakota Petroleum Council, which represents several hundred companies working in the state's oil patch. "In 1999, we had zero rigs working and people left this industry for dead in North Dakota. Technology, geology, price and the business climate changed that."

Ness and Hicks said the achievement is bittersweet, as North Dakota continues to surpass states that have seen a decrease in oil production, including California and Louisiana.

"It's unfortunate the way we overtook them," Hicks said. "We need to get domestic production up so we can wean ourselves from foreign oil."

North Dakota's oil boom also has pushed the state's population to record levels and its unemployment rate the lowest in the nation.

"This is more than oil — it's opportunity," Ness said. "We want these other states moving in the right direction, too. This nation needs to look at energy development. Federal regulatory policies have an impact."

Alaska, which pumped 17.5 million barrels in March, has seen its oil production slip by about 15 million barrels a year since 2008, Alaska Oil and Gas Conservation statistician Steve McMains said. The state expects to tally fewer than 200 million barrels this year. Alaska produced a record 738.5 million barrels in 1988.

North Dakota and Alaska each contributed to about 9 percent of the 178.1 million barrels of U.S. production in February, according to the Energy Department's information administration. Those states in February — along with No. 1 Texas and No. 4 California — contributed to about 45.7 percent of total U.S. production, excluding offshore drilling, records show.

North Dakota crude was fetching about $93.30 a barrel on Tuesday, about $3 less than a year ago. Records show 210 rigs were drilling on Tuesday in the state.

To shake Texas from the top spot, North Dakota would have to nearly double its production. The most recent production numbers from Texas show it produced 1.1 million barrels daily in February and 32.9 million barrels for the whole month. And Texas' oil production has increased more than 8.2 million barrels from February 2011 to February 2012, records show.

"It's going to be tough to catch someone who also is inclining," Hicks said. "There are people out there who say we (North Dakota) could hit a million barrels a day, but it's way too early to say."

Natural gas, a byproduct of oil production in North Dakota, also was pegged at a record 620.8 million cubic feet in March, but about a third of it is being flared because the state lacks collecting systems and pipelines needed to move it to market. Less than 1 percent of natural gas is flared from oil fields nationwide, according to the Energy Information Administration in Washington, D.C.

Officials say about $3 billion in infrastructure improvements are planned in the state to process natural gas and move it to market.