NEW YORK, Sept 27 (Reuters) - Oil production in North Dakota, home to the giant Bakken shale formation, may double to 1.6 million barrels a day by mid-2017, a state official said in remarks shown on video at a meeting on Thursday and received by Reuters on Friday.
Lynn Helms, director of the state's Mineral Resources Department, qualified that number with a number of regulatory, tax and demand risk factors.
At 875,000 bpd, output has already exceeded the department's forecast of reaching 850,000 bpd by early 2014 and staying at that level until 2015. But that forecast is conservative, the department has said before, because it is used in state budgets.
In the video and a presentation, Helms outlined current oil output and forecasts for each of the 17 counties producing hydrocarbons.
"This puts us in a mode where those risk factors don't really come home to roost in North Dakota and we hit mid-2017 at about 1.5 million to 1.6 million barrels a day. About double where we are today," he concluded.
He said risks to the forecast include the possibility of new federal rules governing hydraulic fracturing, or fracking, the drilling technique used to access the shale oil. Other risks include potential changes to oil taxes and demand for more of the light sweet crude that Bakken produces.
Even if regulations and taxes are discouraging and demand flat, he said, oil production could remain at current levels for a "long time".
"I don't expect that to happen, but I do expect one or more of these risk factors to impact our ultimate peak production," he said.
He said U.S. oil refineries only have an additional 650,000 bpd in capacity to take light sweet crude beyond the amounts they are processing now.
But that could change as the domestic market gets flooded with light sweet oil produced not just from Bakken but also the Permian Basin and Eagle Ford formation in Texas and New Mexico.
"As refiners get a taste for light sweet crude oil, we think there'll be some switching back to light sweet from heavy sour but there's going to be some price turbulence involved in all of that," he said.
In recent years refiners spent billions of dollars refitting their plants to be able to process more heavy sour crude because those grades tends to be cheaper and in anticipation of more supplies from Canadian tar sands via the Keystone XL pipeline.
But in the five years that TransCanada's Keystone XL pipeline project has been stalled by environmental protests and pending U.S. government approval, production of light sweet crude in the United States has soared.
In an indication that it recognizes this trend, the country's largest independent refiner, Valero Energy Corp , said this week it would raise the capacity to process light crude oil at its U.S. Gulf Coast refineries.