Outrun Change

We need to learn quickly to keep up with the massive change around us so we don't get run over. We need to outrun change.

More background on Bakken drilling including well costs and EURs

Million Dollar Way points to a presentation by Continental Resources from October 2013 available on this page.

May as well disclose this is not an investment site. It would be foolish to make investment decisions based on what I say.

What I will do is comment on a few tidbits in the presentation that expand my knowledge with the idea that people reading my blog would likely learn as well.

Drilling costs

Falling costs of drilling are described on slide eight. Here’s the disclosed info:

  • $9.2M – completed well cost in 2012
  • $8.0M – target cost for well by end of 2013
  • ~ $7.5M-$7.7M – target for completed well by end of 2014

The $1.2M drop in costs from $9.2M to $8.0M is credited to three factors:

  • $0.4M – completion efficiencies
  • $0.4M – drilling efficiencies
  • $0.4M – drilling from multi-well pads

Recoverable oil per well

Slide 17 shows the expected production curve of Bakken well with 603,000 barrels estimated ultimate recovery per well (EUR). It shows the typically severe Bakken drop-off rate with about half of total production recovered in 100 months (~8 years). It’s a small graph, so a rough estimate is the 500K production level will be at around the 280 month time, or about 23 years out.

Recoverable oil in Bakken

Slide 24 contains estimates of oil in place and recoverable:

Three notes:  B = billion; 2010 amounts are before Lower Three Forks were included; 2012 includes Lower TF.

Oil in place:

  • 577B barrels ’10
  • 902B barrels ’12

Recoverable oil:

  • 20B @ 3.5% recovery factor – ’10
  • 32B @ 3.5%, 36B @ 4%, 45B @ 5% – ’12

Slide 24 also has a cross-section of one well that illustrates the various layers of the Bakken Petroleum System. This well has a 308′ layer. Typical thicknesses are from 250′ to 400′ according to the slide.

Other ideas

Slides five and six show the area of most concentrated development, which I finally realized is heavily weighted to the east of Williston, with more area to the south than north. Aha! The location of the Halliburton plant is really good – the southeast edge of the city.

Slide seven has a cool diagram of high-density drilling.

There is a huge amount of info included that is far over my head, yet I’m learning more every time I look at one of these presentations.

(Hat tip: Million Dollar Way)

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