Competition Breeds Competence: North Dakota Oil Production Continues To Prove Resilient

The North Dakota Industrial Commission Department of Mineral Resources has released the most recent oil and gas production numbers, and despite a plunging rig count oil production in the state continues told remarkably steady.

After a slight increase in average barrels per day last month, April saw a slight 1.8 percent decrease. But, basically, not much is changing.

That’s pretty remarkable, and a testament to something I wrote about earlier this week: “competition breeds competence.”

The term comes from American Enterprise Institute scholar Mark Perry, and he uses it to describe competition forcing those engaged in any enterprise to improve.

In this instance, competition from the middle east – specifically OPEC flooding the market with oil – has inspired American oil companies, including those operating in North Dakota, to get more efficient at what they’re doing.

Oil production lags behind drilling activity. After all, oil wells keep pumping even when new wells aren’t being drilled. But even so, we’d expect to see a reduction in North Dakota oil production by now given the fall off in drilling because producing oil wells see a decline in their output as they age. The only way to keep production growing, or even steady, is to keep drilling.

North Dakota has been able to keep oil production stable despite a 57 percent decline in the number of active drilling rigs since September.

“Oil companies say they have recalibrated their operations to survive even if prices stay lower for a long while,” Reuters reported recently.

Competition breeds competence.