More explanation why drilling costs are going down in Bakken

There are a lot of factors explaining why drilling costs are higher in Bakken than elsewhere. Multiple factors explain why costs are dropping.

Seeking Alpha, by Michael Filloon, explains in Bakken Update: Bakken Well Costs Are Decreasing Faster Than Companies Indicate.

Just a few reasons costs are higher: The formations are deeper, infrastructure hasn’t had decades to develop so isn’t as strong as elsewhere, the extreme cold weather makes drilling more difficult, the spring thaw makes truck deliveries slower because of lighter loads.

A number of factors beyond pad drilling and growing efficiency are at play to reduce costs. The article’s conclusion:

In summary, we continue to see well costs decrease in the Bakken. These decreases are for several reasons. Water depots and salt water disposal wells continue to be drilled. Chinese and Russian ceramic proppants are less expensive, while sand is readily available, decreasing cost. Oil service backlogs are much shorter, which has allowed operators to bid jobs. This has decreased drilling and completion times. Well costs will continue to decrease as operators switch to LNG powered rigs. Pad and batch drilling should also decrease the number of days to drill and complete. Companies continue to decrease estimates on well costs in 2013.

(hat tip: Million Dollar Way)

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