Increased density of drilling in Bakken

Million Dollar Way has a complex post describing the increasing density of wells on each portion of land being drilled in North Dakota. Think 14 or 28 wells on 4 square miles. I’ll try to pull a few key ideas out of An Example of “Ears Pinned Back” — As CLR Calls It – In The Bakken.

Density in 2007

In ancient days, say about 2007, the concept was one well on a section. That according to the article.

Density in 2011

One section is a square mile, or 620 acres.  Two sections are 2 square miles, or 1240 acres. Several sections can be combined for simplicity of drilling. A 2480 acre spacing unit is 4 square miles. Either 2 or 4 section spacing units allow drilling wells from one or just a few pads, which is much more economical. The laterals can run for something like 2 miles, around 10,000 feet across two sections, which is more economical than drilling 2 wells with 5,000 foot laterals.

When I started following Bakken news, the astounding idea was that everywhere you see one well there will eventually, some day, in the distant future, be 8 or 10 additional wells drilled. That would mean the full build out would be 8 or 10 or 12 wells per spacing unit. 

If I recall correctly, spacing units were usually one section, sometimes stretched to two.

Density in 2014

Today the spacing units are 2 or 4 sections, which means 1,240 or 2,480 acres.

Look at the staggering number of wells per spacing unit.

As I read through the MDW article yet again, here’s the numbers for permits or plans for wells per spacing unit:  21, 30, 14, 21, 28, 21 or 28, 12, 28, 21, 21, 34, 36, 14, 28.

An MDW correspondent describes much of the information and closes as follows:

Before too long these five spacing units could likely have around 100 wells — 21-28, 21-28 and 14 wells in Continental’s three spacing units, and 17 wells in each of Hess’ two 1280-acre spacing units.  Amazing!

If I follow the discussion correctly (a big assumption), the Continental spacing units are 4 sections each. The two mentioned Hess’ spacing units are 1280 acres, or two sections.  That makes 16 sections, or 16 square miles.

Mr. Oksol closes with:

Then think about this. Each well averaging about $10 million (in round numbers) x 100 wells = $1,000 million or more simply $1 billion, just for the drilling in five spacing units.

That’s around a billion dollars invested for around 100 wells on 16 square miles. A long way from 1 well per section just seven years ago.

Let me extend the math a bit. With my wild assumption of 500,000 barrels ultimate recovery and an assumed $80/barrel price, here’s the reason to drop a billion bucks for drilling: 

  • 500K EUR x 100 wells = 50M barrels recovered in productive life. 
  • 50M barrels x $80/barrel = $4 billion of revenue over life, with front-loaded ROI.

Staggering.

Update: Great article explaining the efficiency goals and background on ‘downspacing’ from E&E Publishing – Bakken Shale:  Faced with production declines, drillers cook up new recipes for growth.

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