Bad weather cuts North Dakota oil output 80%; fixing it will take days
North Dakota, the third largest oil-producing U.S. state, said significant damage from severe weather over the past week has temporarily knocked out about 80% of the state’s production, and it will take days to restore that output.
The state produces roughly 1.1 million barrels of oil a day, and the temporary hit to production has contributed to a recent bump up in prices at a time when supply is already being constrained by sanctions on Russia following its invasion of Ukraine.
The unusual cold blocked roads with snow, caused heavy ice accumulation and resulted in power outages, said Katie Haarsager, spokesperson for the North Dakota Oil and Gas Division, on Wednesday. The weather has kept oil companies from accessing production facilities while they also deal with damage to electrical infrastructure, she added.
“This week will be rough on production, but we are hopeful each day more areas come back online and maybe by the weekend most will be restored,” said Ron Ness, president of the North Dakota Petroleum Council. “The situation is improving quickly each day.”
On Wednesday, U.S. oil and gas producer Hess Corp warned that some production had come in lower than anticipated because of factors including severe weather. The company said full-year net production will come in at the lower end of its 325,000-330,000 barrels of oil equivalent (BOE) per day guidance due to the weather.
“Every barrel is desperately needed in this market right now,” said John Kilduff, a partner at Again Capital LLC in New York. “There’s no room for error or for freak events.”
Output in the state’s Bakken region was expected to rise to 1.2 million barrels per day (bpd) in May, which would be its highest since December 2020, according to the U.S. Energy Information Administration.
Before the weather events, analysts at Wood Mackenzie increased their production forecast for the Bakken shale region, located primarily in North Dakota, by about 50,000 bpd to roughly 1.14 million bpd in 2022 from forecasts in November.
Source: Reuters (Reporting by Stephanie Kelly; additional reporting by Liz Hampton and David Gregorio)