North Dakota, the third-largest oil-producing state in the U.S., experienced a significant drop in crude production in October. Output fell by 520,000 barrels per day (bpd) as operators shut down wells to protect them from wildfire damage. The state’s production in October dropped to 1.178 million bpd, and it has yet to return to pre-crisis levels.
Mark Bohrer, assistant director of the North Dakota Department of Mineral Resources’ oil and gas division, stated that the state’s rig count remained steady at 37 in December. However, he predicts that number could rise to the mid-40s in the coming years.
Once a leader in U.S. oil production, North Dakota’s Bakken region has seen its boom days fade. Last year, production from the Bakken dropped to around 1.27 million bpd, about 18% lower than the peak reached in late 2019. Wood Mackenzie forecasts further declines, predicting output will fall to 1.15 million bpd by 2026 due to dwindling reserves.
Against this backdrop, the state’s recent rejection of a key pipeline proposal is raising eyebrows. Summit Carbon Solutions sought approval to build a pipeline that would transport carbon dioxide (CO2) from ethanol plants in the Upper Midwest to be stored underground in North Dakota. Despite the importance of carbon capture for sustaining Bakken production, the North Dakota Public Service Commission turned down the application.
Lynn Helms, director of North Dakota’s Department of Mineral Resources, did not comment on the commission’s decision but emphasized the critical need for CO2 from out of state for enhanced oil recovery (EOR) in the Bakken. “If we’re going to stabilize and sustain Bakken oil production, carbon dioxide has to come to North Dakota from somewhere,” Helms said. “We must incorporate carbon capture and utilization into North Dakota’s economy, or we risk leaving billions of barrels of oil untapped.”
Oil extraction and production taxes account for more than half of all tax revenue in North Dakota, surpassing sales and property taxes combined. The state’s decision is particularly perplexing given its involvement in several carbon capture projects, including those at the Rainbow Energy Coal Creek Station, the Great Plains Synfuels Plant, and the “Project Tundra” initiative at the Milton R. Young power station. Additionally, a pipeline already transports CO2 from Wyoming to North Dakota for EOR purposes.
With North Dakota’s oil production in decline, the role of carbon capture and CO2 transportation could become even more critical to the state’s oil industry.
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