North Dakota has extended its policy on how long producers can leave wells uncompleted after drilling, a move that is expected to help drillers cope with weak oil prices, the state’s Department of Mineral Resources said on Thursday.

Oil producers around the country have announced plans to drop rigs and delay completing wells as U.S. crude prices have eased to around $61 a barrel, below the average $65 a barrel that most companies require to turn a profit.

Currently, producers in North Dakota must either put the wells into production or plug them at the one-year mark to avoid being given abandoned status.

The new policy, which takes effect immediately, grants the operators an even greater extension, effective until spring of 2027, with operators required to monitor pressure in the wells quarterly.

“Due to a soft pricing environment and the potential for rig and/or activity level reductions, the Department of Mineral Resources is implementing this waiver as it has done in the past,” said Nathan Anderson, the department’s director.

“The goal is that the waiver will assist operators in maintaining healthy activity levels,” he said.

About four or five operators in North Dakota plan to drop rigs, the state’s Department of Mineral Resources said earlier this month.
Source: Reuters