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Domestic crude oil prices are moving toward $100 per barrel, but North Dakota’s Bakken oil field is not seeing a corresponding expansion in new drilling, according to Jacob Orledge of the ND Monitor. State regulators report that activity levels remain flat, because major energy companies are prioritizing budget stability and potential optimization over rapid expansion.
Currently, 25 drilling rigs and eight frack crews are active in the state. Until there is a price stabilization, this output is expected to continue, as the energy companies already have budgets set for this year. Orledge reports that a decade ago, increasing oil prices like we are seeing now would prompt quick investment in new drilling, but that is not the case currently, due to recent industry consolidations that have left the Bakken dominated by large corporations with fixed capital budgets.
Instead of new drilling, North Dakota operators are looking to restart the state’s 2,835 inactive wells, which is a process that takes less than a week compared to the months-long process to dig new wells.
Part of the reasoning behind the consolidation in prior months was oversupply of oil, meaning decreased demand and lower prices. Now, with the U.S. and 31 other countries drawing on strategic reserves, demand has skyrocketed, and the Strategic Petroleum Reserve is expected to dip to its lowest level since 1982 in the coming months.
Despite this, state regulators do not expect operations in North Dakota to significantly change until 2027.
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