BISMARCK, N.D. (AP) — North Dakota's largest oil producer says it will cut all spending by 80 percent in the state and suspend its well-completion operations in April due to depressed crude prices.
Denver-based Whiting Petroleum Corp. said in an earnings report this week that it will operate only two rigs in the state. Until prices rebound, wells that are drilled won't undergo hydraulic fracturing, or fracking, a process that uses pressurized fluid and tiny particles to break open oil and gas bearing rock up to 2 miles underground.
"We believe this conservative strategy should help us to maintain our liquidity position and leave us well positioned to capitalize on a rebound in oil prices," Whiting CEO Jim Volker said in a statement.
For the year, the company said it expects to pump 128,000 to 138,000 barrels per day, down from about 155,000 barrels it produced in the fourth quarter of 2015. At the end of 2016, the company expects to have 73 wells drilled but uncompleted, which it says "should afford Whiting a highly capital-efficient means to resume growth upon a rebound in oil prices."
North Dakota Petroleum Council President Ron Ness said Whiting's announcement is not any different from what other oil producers have been doing already.
"The only difference is Whiting had been completing their wells," he told the Bismarck Tribune (bit.ly/1QDr8vH).
Depressed oil prices have helped build an inventory of about 1,000 drilled but uncompleted wells in North Dakota, the nation's No. 2 oil-producing state behind Texas.
North Dakota's all-Republican Industrial Commission, led by Gov. Jack Dalrymple, allowed well owners in the fall to bank oil in the ground for up to two years before bringing wells online through hydraulic fracturing.
Companies previously had to bring the wells online within a year but regulators decided to give drillers an extra year, hoping for a rebound in crude prices that would provide the state with a better long-term payoff in tax revenue.
Ness said the lack of well completions is a "sign of the times — the economics are just not there."
Information from: Bismarck Tribune, http://www.bismarcktribune.com