Rigs at 29% of March 2020 levels
Bakken looks to lose greater share of Northern Border
Bakken natural gas production continues to show slight declines, allowing for additional Canadian exports to the US Midwest as Watford City hub prices fall to nearly $2/MMBtu.
A slight dip in Bakken production opened space for West Canada gas along Northern Border Pipeline, and more space is expected to appear in the coming months, according to S&P Global Platts Analytics.
Platts Analytics sample data for the Williston in North Dakota shows a swing from 2.2 Bcf/d in March to 2.14 Bcf/d as of April 16. It is expected to fall to 2.09 Bcf/d by April 20.
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As a result, the basin has sent less gas to the US Upper Midwest on Northern Border. Bakken flows on Northern Border fell to just 1.7 Bcf/d on April 6, the lowest it has been since Feb. 19, when extreme cold caused production curtailments. Bakken flows measured at 1.8 Bcf/d on Northern Border on April 16.
Platts Analytics expects Bakken production to average 2 Bcf/d in April before falling lower in the months ahead. The summer is expected to average 1.8 Bcf/d and reach as low 1.7 Bcf/d by October. This should continue to weaken Bakken flows along Northern Border, allowing West Canada to utilize more capacity to send a total of 3.7 Bcf/d this summer, an additional 700 MMcf/d from last summer.
The decline in production stems from active rig counts in the Williston Basin recovering slower than other oil-rich basins following last year’s crude oil price crash. In early 2020, the basin averaged 55 active rigs. It only averaged 10 rigs by June following the March price collapse. As of April 15, it had only recovered to 16 rigs, according to Enverus.
Bakken operators are running 29% the number of rigs compared to what the play averaged before the commodity crunch. By comparison, other US oil-rich plays have reactivated rigs at a higher clip. For example, the Denver-Julesburg is at 48% pre-crash levels, the SCOOP-STACK is at 38% and the prolific Permian returned to 56%.
The North Dakota Industrial Commission also shows a production drop in its most recent numbers released April 15. February production averaged 2.49 Bcf/d compared with 2.63 Bcf/d in January. Some of the decline is due to the February winter storm which crippled production in basins across the nation.
“The price of natural gas delivered to Northern Border at Watford City increased to $23.42/MCF Feb. 17 and then fell back to $2.06/Mcf as of April 15,” said NDIC Director Lynn Helms during a webinar.
By comparison, Chicago cash prices were at $2.56/MMBtu as of April 16 while Colorado Interstate Gas was at $2.62.
Despite the declines in Bakken gas production, rising gas-to-oil ratios in new wells coming online could provide upside risk to the shale play’s production volumes this summer.