DMR: Longer laterals and efficiency keep state production flat despite price swings

Nathan Anderson, Director of the Department of Mineral Resources, told the Budget Section the department expects production to remain relatively flat in the near term because operators are drilling longer lateral completions and optimizing operations.

“This is really what is driving the efficiencies,” Anderson said, describing a shift from two-mile laterals to three- and four-mile laterals, and noting the state recently recorded an average lateral length of about 13,400 feet in 2026.

Why it matters: The combination of longer laterals and other operational efficiencies allows operators to maintain or modestly increase production without increasing the number of active rigs or frac crews—an important dynamic for state revenue forecasts, gas capture planning and regulatory oversight.

Key numbers and trends: DMR presented 2025 production as essentially flat quarter-over-quarter and reported a statewide gas-capture rate of roughly 95 percent. The agency showed rig counts have been relatively steady, frac crew counts are down seasonally, and average lateral footage rose substantially from roughly 10,500 feet (2023) to about 13,400 feet (2026).

Policy and regulatory notes: Anderson said overlapping spacing units and longer laterals require hearings for 3- and 4-mile spacing; the department continues to process an elevated number of oil-and-gas hearing cases while monitoring well integrity, spacing and unitization options. Committee members asked whether five-mile spacing would become common: Anderson said he had seen the first 5-mile case in the state but did not expect large-scale adoption unless economics change significantly.

Budget and staffing: Anderson summarized DMR hiring (113 FTEs, most new positions filled), succession planning for pending retirements, and Project Northstar—an IT modernization and data-hub effort the department plans to address in the next legislative session to keep pace with industry data needs.

Market outlook: Members raised concerns about short-term price swings related to global events. Anderson told the committee the budget baseline used a $59-per-barrel price for the first year moving to $57 on July 1, 2026, but that recent Middle East disruptions had pushed WTI much higher; his long-term view is production will normalize as supply/demand balance returns.

Next steps: The department will continue reporting activity, handle spacing and permit hearings as required, and follow up on litigation and one-time litigation-cost invoices expected later in the biennium.