Putting The Most Recently North Dakota Crude Oil Production Decline Into Perspective -- March 15, 2015

Motley Fool headline yesterday:

And So it Begins: North Dakota Oil Output Slides 3.3% as Oil Plunge Takes a Toll.

I did not read the article. But the headline caught my attention. The 3.3% decline in oil production in North Dakota refers to the production in January, 2015, compared to the production the previous month, December, 2014.

As noted, I did not read the article. I assume Motley Fool provided a good historical perspective.

I am sure that the Fool noted that production is always tough in the month of January (and all winter months) in North Dakota.

I am sure that the Fool noted that as production increases, it becomes more and more logistically difficult to increase production on a percent basis -- due to any number of factors. In fact, folks have been surprised that the Bakken boom -- increase in production month-over-month -- has lasted as long as it has.

I am sure that the Fool noted that in addition to the slump in oil prices, Bakken producers were facing state-mandated obstacles: a) conditioning Bakken crude oil before shipping by rail; and, b) flaring restrictions. Both can significantly affect production.

I was most curious how the January, 2015, production delta (on a percentage basis) compared to previous Januaries.

Generally speaking, one could expect a 3 - 5% increase in North Dakota oil production month-over-month in the early boom. But winters are difficult for the operators in the Bakken. Last January (2014), the month-over-month production increase was just over 1% compared to almost 4% the following May (2014). Again, considering that we are well over a million bopd, a 4% increase in production is --- well, it catches my attention.

These were the numbers early last year:

But what was the production in January, 2013, and January, 2012, when it was much easier to hit new production records?

Folks may remember that I was trying to predict when North Dakota production would go over 1 million bopd (by the way, of all non-advertising-supported blogs and news outlets, I was the first to predict the correct month, when North Dakota would go over the 1 million bopd milestone). I would provide the data and then put in my own estimate ("E") for the next 12 months. Once the data came in, I changed the "E" to actual results ("A").

These were the actual production numbers and increases/decreases in production in the months of January, 2012, and January, 2013:

Look at January, 2013 -- a decrease of over 4%. No slump in the price of oil, no state-mandated obstacles, and production month-over-month decreased by an astounding 4% when in good months production could increase by 6%.

January, 2012, did show a 2% rise in production. However, that was a paltry increase compared to the 4.8% rise in production the previous month (December, 2011).

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Bottom line: all indications are that we will see significant declines in production going forward. However, the 3% decline in the most recent reporting month (January, 2015) is in line with previous Januaries.

November, December, January, February are tough months in the Bakken.

What amazes me is that January, 2015, was not significantly worse. January, 2015,was in-line with previous Januaries in a "qualitative" sense despite all the headwinds -- rigs being stacked; operators choking back on production due to oil rices; state rules on conditioning oil to be shipped by rail; and, strict state flaring rules.

What also amazes me is I have been posting the Director's Cut for several years now. When I first started blogging I didn't even know what the "Director's Cut" was, and furthermore, I didn't even realize how important they would become for a historical record.