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N.D. could be No. 3 oil state in U.S

GRAND FORKS, N.D. -North Dakota's crude oil production continues to increase steadily, keeping pace with last year's big gains and, it appears, making it the third-largest producing state.

According to the latest figures released Thurday by the state Industrial Commission's Department of Mineral Resources, in January daily oil production rose to a record 546,000 barrels of oil, up 11,000 barrels from December's daily output.

That puts the state's production virtually at the same level as the long-time third-largest producing state, California, and within a few months of reaching the production level of Alaska, the second-largest producer among states.

It's difficult to peg either state's exact production in the same way as North Dakota reports its output, partly because California and Alaska also have state offshore production that gets reported separately from its land-based pumping, said Alison Ritter, spokeswoman for the mineral resources department that regulates the state's oil industry.

But according to figures from the federal energy department, it appears California's daily oil production in December was about 534,000 barrels while Alaska's was at 600,000 a day.

Figures obtained Thursday from California officials indicate the state's production decreased in January from December, but it wasn't clear if the January figures include the state's off-shore production.

Texas produces well over 1 million barrels of oil a day, according to the federal Energy Information Agency.

In addition to state production, federal off-shore leases added up to more than 20 percent of U.S. production.

Big boost

But no state has increased its production even close to the rate North Dakota has since the Bakken formation got tapped in new ways the past four years. California and Alaska have seen declining production for years. Only four years ago, North Dakota was the ninth-leading oil-producing state, so its rise has been rapid while most oil-producing states have been slowing output.

North Dakota's monthly oil production was up about 62 percent by the end of January to 16.9 million barrels compared with January 2011, and has more than doubled since January 2010 when the monthly total was 7.33 million barrels, according to state figures.

North Dakota's daily output in January was equivalent to 9.6 percent of total U.S. daily production, based on last year's average.

Ritter said the increase seen in January is in line with last year's average increases, when the annual total amounted to a record 153 million barrels.

January's total production was 16.9 million barrels of crude. Natural gas production, meanwhile, totaled 17.7 million cubic feet, or about 571,000 cubic feet per day in January.

Record prices

A record 6,600 wells were producing oil in January, some nearly 50 years old, while the 200 new ones brought into production in January nearly all are in the Bakken and Three Forks formations where the recent boom began, sparked by horizontal drilling and hydraulic fracturing that has opened up the "tight rock" formations as never before.

The average count of drilling rigs working in the state remained steady at 200 in January and 212 new "spuds," or new wells begun, were tallied, up from 140 in January 2011. That's due partly to the much milder winter this season that has kept production at high levels, Ritter said.

It also highlights that the average time needed to drill a well is being shortened, to less than a month.

Today, there are 205 rigs drilling in the state, according to the mineral resources department.

Spurring the oil production, of course, have been high prices for crude oil.

Last year, the price of the benchmark West Texas crude set a record, averaging just a few cents below $95 a barrel for the year. West Texas crude was up Thursday to just below $107 a barrel.

Because of transportation bottle-necks in getting North Dakota's sweet crude from the Bakken formation to market, the oil's price has been at a discount to West Texas of $10 to $20 per barrel in recent months, according to state officials.

Stephen Lee is a writer for the Grand Forks Herald. The Bemidji Pioneer and the Herald are owned by Forum Communications Co.