By Chester Dawson

North Dakota's crude-oil production in September dropped to the lowest level in more than two years on depressed prices, staying below one million barrels a day for the second month in a row, the state's Department of Mineral Resources said Wednesday.

Crude production fell 1.1% on the month to 971,658 barrels a day in September, the most recent month for which data is available. That is the lowest level since February 2014, when output was 952,055 barrels a day, and follows a 4.7% drop in August.

Lynn Helms, director of the department, said depressed prices will likely weigh on North Dakota's production volumes next year. "The lower-for-longer oil price pushes that million-barrel-a-day [recovery] number out into 2018," he said at a news conference in Bismarck.

North Dakota's production is centered on the Bakken Shale formation, one of the world's highest-cost oil fields. Prices below $50 a barrel -- half the level two years ago -- have forced shale-oil producers in plays like the Bakken to slow drilling activity and curb output.

Total production in North Dakota was 29.2 million barrels of oil in September, down from 30.4 million barrels in August, the state said.

A slight uptick in the number of drilling rigs deployed and wells completed were not enough to halt the slide in output, a result of production rate declines from older wells.

North Dakota's active rig count currently stands at 38 rigs, up from 33 in October, the state said. The all-time high for the state was 218 rigs in May 2012. The number of wells completed, or brought into production, rose to 71 in September from 63 in August, accordingto provisional state figures.

Natural-gas production in North Dakota fell 1.7% in September to 1.61 billion cubic feet a day, state figures showed. Energy producers burned off, or flared, 11.9% of gas output, up from 11.4% in August. Gas is a byproduct of oil production.

Most oil in North Dakota is extracted by hydraulic fracturing, or fracking, where a mixture of water, sand and chemicals is pumped into rock formations to push oil out. Such wells are first drilled and then put into production after being fracked, or completed.

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(END) Dow Jones Newswires

November 16, 2016 16:34 ET (21:34 GMT)

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