North Dakota is pumping oil at the slowest pace in two years

WASHINGTON (Bloomberg) -- North Dakota oil production dropped below 1 MMbpd in August for the first time in more than two years, as depressed prices forced explorers to cut back.

Production from the state’s portion of the Williston basin fell to 981,000 bopd, the lowest since March 2014, according to a report by the North Dakota Pipeline Authority. The state’s crude output has shrunk from a peak of more than 1.23 MMbpd in December of that year.

"It does send a signal to the world markets that U.S. producers are serious about reducing activity, reducing costs, reducing production and I think that should help support the recent price increase we saw," Lynn Helms, director of state’s Department of Mineral Resources, said in a call with reporters.

The collapse in oil prices from above $100/bbl in 2014 prompted producers to curtail drilling in unprofitable areas. U.S. shale production could fall to about 4.4 MMbpd in October, the EIA forecast last month. Lower output and last month’s OPEC decision to limit supply has helped oil rally above $50/bbl this month from a 12-year low of about $26 in February.

Horizontal fracing of tight rocks in North Dakota’s Bakken region contributed to a renaissance in U.S. oil production this decade that turned the country into the world’s second-biggest oil producer for a time. North Dakota was the second-biggest oil-producing state in the U.S. in July, trailing only Texas, Energy Information Administration data show.

North Dakota’s output should “bottom out” at 900,000 bopd by the middle of next year, Helms said. At least two North Dakota operators restricted production in August, contributing to the drop, Helms said. North Dakota’s rig count stands at 33, after falling to 22 in May, Baker Hughes Inc. data show.

"North Dakota is hit harder than other places, but it’s not as if we’re falling off the cliff in terms of production," U.S. Energy Secretary Ernest Moniz said on Bloomberg TV.