North Dakota Likely to Pass California As Top Oil Producer

North Dakota will likely leapfrog California and may even overtake Alaska in the next year -- far outpacing earlier industry predictions -- to become one of the nation's three biggest oil-producing states, a government regulator said.

Government and industry officials had predicted that North Dakota likely would hit the No. 2 spot within the decade but the explosion of drilling activity has accelerated the timeline.

Not considered a big oil state until recently, North Dakota went from the ninth-biggest producer in 2006 to fourth in 2009, where it currently stands. This boom is thanks to advances in drilling and hydraulic fracturing techniques and a rise in oil prices that made it more profitable for companies to tap into the vast reserves trapped in the Bakken and Three Forks shale formations.

North Dakota's 5,951 wells produced about 444,000 barrels per day in August, the last month for which figures were available. Last August, the daily barrel count was about 350,000, officials said then.

With nearly 200 wells being drilled and plans for 1,500 to 2,000 new wells over the next year, North Dakota should overtake California as the nation's third-largest producer sometime in the next 12 months, said Lynn Helms, the director of North Dakota's Department of Mineral Resources.

"We should pass California by the third quarter of next year," he said.

North Dakota pumped a record 113 million barrels of oil in 2010, and production estimates show the state should top that by at least 20 percent this year.

North Dakota's oil patch is pumping about 118,000 more barrels of crude daily than a year ago and more than double the production in 2008.

The rise in state's oil production, which forecasters predict could reach up to 700,000 barrels daily by 2015, comes as oil production is slowing in California and Alaska.

Steve Grape, the domestic reserves project manager for the U.S. Department of Energy's information administration, said California produces about 539,000 barrels of oil daily, compared with about 550,000 barrels in Alaska and about 1.2 million barrels daily in Texas.

"No data I've seen shows California's production increasing, so they do have a target on their neck," Grape said. "And Alaska's production is declining faster than California's.

The number of producing wells in North Dakota jumped from 5,115 to about 6,000 in the past year, and that number is expected to rise by up to 2,000 wells in the next year, Helms said.

There were 193 rigs being drilled as of Friday, which is more than double the average daily rig count in 2009.

Helms said about 95 percent of the rigs drilling in North Dakota are trying to tap into the Bakken and Three Forks formations in the western part of the state.

State and industry officials say 99 percent of rigs drilling in those formations hit oil, and that nine of 10 are profitable.

"God bless North Dakota," Grape said. "Anything is possible in a year but it's going to depend on the number of wells producing, the takeaway capacity to move crude to market, and of course, price."

Helms said so-called takeaway capacity with rail, truck and pipelines is "more than adequate" at present thanks to millions of dollars in infrastructure work that has included new rail shipping facilities and pipeline expansions in the state.

North Dakota sweet crude was fetching about $79 a barrel late this week, up about $4 from a year ago. A record high of $136.29 a barrel for the state's crude was set in July 2008.

Oil companies have said that drilling in North Dakota is profitable if oil prices are more than $50 a barrel.