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ND oil production rate nears record levels, but concern over prices remains

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Despite seeing the second highest level of production on record in June, North Dakota officials have warned the state's oil industry will contract if prices don't recover.

The ND Department of Natural Resources has revealed the state produced 1.211 million barrels of oil a day during June – beaten only by the 1.244 million pumped in December 2014.

The state reached a milestone in June – passing the 10,000 mark for shale oil wells – but it comes amid rising uncertainty for the oil industry prompted by plummeting barrel prices that has caused the shutdown of numerous rigs in North Dakota.

June's production was managed despite there being just 78 rigs in operation in the state, compared to the all-time high of 218 in May 2012.

The North Dakota DNR says that the state should be able to maintain production of 1.2 million barrels of oil a day for the next two years.

Officials hope that is the case so it keeps state coffers swelled, but DNR director Lynn Helms told the Star Tribune that the slump in prices will start taking an even greater toll if it is not corrected soon.

"Either we are going to have to see some better prices or we are going to see further contraction in the oil and gas industry," he told reporters Friday.

The price of North Dakota crude has fallen from almost $48 per barrel in June to just $28.50 per barrel today, the lowest seen in almost seven years.

Middle East competition not aimed at ND

There had been suggestions that members of the Organization of Petroleum Exporting Countries (OPEC), notably Saudi Arabia, had been producing oil at higher-than-usual levels as a way of driving down prices and putting the squeeze on U.S. shale producers.

But Helms told USA Today this wasn't necessarily the case, saying "OPEC's efforts are geared more towards other competitors, like Russia and Iran."

"What we're observing is U.S. producers are not indicating any decrease in U.S. oil production," he said. "Even if the price has dropped, they are finding ways to cut costs and to be a lot more efficient with their drilling and completions, and they've built up a very large number of non-completed wells."

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