North Dakota oil production hit a new record high in July, according to state regulators. Oil producers, including Hess (NYSE:HES), Whiting Petroleum (NYSE:WLL) and Continental Resources (NYSE:CLR), combined to produce 34.4 million barrels of petroleum for the month, an average of 1.1 million barrels per day. That was up from 32.8 million barrels of oil in June and despite new anti-flaring rules that could curb output.
North Dakota oil and gas production keeps surging
North Dakota's natural gas production also set a new record in July. Producers pumped out 1.3 billion cubic feet of natural gas per day, which is enough to meet the energy needs of more than 14,000 homes for a full year. However, producers flared 26% of the state's total natural gas output in the month, though that was down from 30% the previous month. A reduction in natural gas flaring is key as producers will face stiff penalties in the future if flaring percentages miss key benchmarks.
As long as drillers can meet those benchmarks there likely won't be anything to halt the momentum of surging North Dakota oil production growth.
Hess and other drills see big growth potential in North Dakota oil production over the next few years. From its production base of 80,000-90,000 barrels of oil equivalent per day, or BOE/d, in 2014, the company sees its output spiking to about 150,000 BOE/d by 2018. In fact, Hess' position in North Dakota is expected to be the company's leading contributor to its overall production growth through 2018. One reason Hess isn't worried about its growth prospects is because it recently expanded its natural gas processing plant from 110 million cubic feet per day, or Mmcf/d, to 250 Mmcf/d, meaning it won't have any issues meeting the flaring guidelines.
Top North Dakota oil producers focus on optimizing results
Meanwhile, rival North Dakota oil drillers Whiting Petroleum and Continental Resources continue to focus on becoming more efficient operators in order to pump out more oil and gas from each well. Whiting Petroleum, for example, is using a new completion technique to improve its wells in the state. The new technique to date has increased the estimated ultimate recoveries of its oil and gas wells by 23%. It is also working on drilling even more future wells per section in order to maximize its oil and gas recovery. As the following slide shows, the company could drill up to 16 wells per section, which will help the company pump out even more oil in the future.
Continental Resources is also working on new techniques to get more oil out of the ground in North Dakota, as only about 3.5% of the total oil in place is actually being recovered by producers. In addition to well density tests to place more wells per section, Continental Resources is working on using larger volumes of proppants to frack its wells, along with using slick water. Initial results show its wells are seeing 25% higher production than neighboring wells. This suggests that there's a lot more oil production growth potential left in North Dakota.
North Dakota oil production growth isn't showing any signs of stopping. While the rate of growth in the future might be lumpy, producers have plenty of wells left to drill. Furthermore, drillers are just scratching the surface on oil recoveries in North Dakota, and new drilling techniques could unlock even more product in the future. That suggests there are plenty of opportunities left for investors to profit from the North Dakota oil boom.