According to state Pipeline Authority Director Justin Kringstad’s estimate on Friday, a winter blizzard that has affected the northern United States has reduced North Dakota’s oil production by 200,000 to 250,000 barrels per day (bpd), or 18% to 22%.
The Northern Plains and Midwestern areas experienced significant snowfall and freezing rain as a result of a winter storm that battered the center of the country. Colder temperatures cause freeze-ins in oil and gas wells.
In a message sent through email, Kringstad stated that he expected oil production to resume rather quickly over the following few days as visibility improved and roads were cleaned. He also mentioned that there were a few isolated, localized power outages. To the best of his knowledge, the key pipelines and processing facilities for oil and gas have continued to operate, he added, adding that the majority of roadways are still blocked.
After Texas and New Mexico, North Dakota is the third-largest oil-producing state in the United States, producing around 1.1 million barrels daily. It momentarily lost 80% of production in April as a result of bad weather.
Bryan Sheffield, the founder of the energy fund Formentera Partners, which has holdings in the state, calculated that production is down by around 20% based on interactions with pipeline operators. Over the weekend, he noted, output should resume.
Drilling and completion operations will be delayed due to the storm. According to senior analyst Nathan Nemeth of the consulting firm Wood Mackenzie. According to North Dakota Petroleum Council President Ron Ness, “we definitely expect a slowdown of rigs and activity for a few days, but that’s regular business operations in the Bakken during winter months.”
US production is not a unified system. The US government has very limited influence over oil production in comparison to several other state-run oil firms. Instead of being dictated to by the whims of the government or an organization like OPEC. Producers in the US are free to drill for and produce oil based primarily on their own calculations.
In essence, US producers base their decisions on where they believe the market will go. Rather than on the dynamics of the market. There is no legally binding agreement to limit production from US producers. Or foreign oil corporations operating in non-OPEC nations if OPEC decides to restrict production in its member states.
A reduction by OPEC will likely result in higher oil prices for US producers. Which might promote more production. And make profitable wells that were unprofitable at lower oil prices. No one oil producer will believe that they have the power to influence the market. Given that many US and Canadian oil producers are quite modest.