A few years ago, I would have had a 500 word post on each of the following articles from Million Dollar Way. Now I’m to the point where I get the knowledge quicker and only want to summarize in a few sentences. The news in these two posts is huge: First, the horrid Bakken decline rate might not be as big a deal as previously thought. Second, the drilling rate of 2,500 new wells a year is probably sustainable.
Wow.
The declining relevance of the decline rate
3/31 – Million Dollar Way – Decline Rate And The Bakken – Reports are filtering out that instead of a continuing decline in production, Bakken wells hit a plateau at about 3-4 years and retain that production level. That means after the initial rapid decline, the production will stabilize for a very long time. The models I’ve seen show a continual decline over the full life.
Also, Mr. Oksol says the very early estimates were that 10,000 wells would be needed to completely drill the Bakken. In a year or two the estimate was 20,000, then 48,000. When I started paying attention, the guess was that 60,000 wells would cover everything. He is seeing new speculation surface that 100,000 wells will be needed. That’s 40 years of new drilling.
And that means a humongous recovery even assuming no petroleum wizard ever figures out any secondary or tertiary recovery methods.
Where could Bakken production go?
4/1 – Million Dollar Way – How Much is the Bakken Capable of Producing? Idle Chatter – Where can production go? Well, Mr. Oksol points out that if certain major geopolitical issues happen, then production will crater. If the Saudis flood the world with cheap oil for a very long time, or the environmentalists succeed in fabricating a ban on fracking, production will wind down over the next decade or so. If not…
Article does a quick survey of the factors needed to sustain 2,500 wells a year. Good list of the variables. He sees those variables either very good, stabilizing, or rapidly falling into place. With my limited understanding, I would agree: the major technical factors are in place for sustained drilling and the whole supporting infrastructure is slowly catching up. Seems to me the drilling will continue, efficiency and effectiveness will grow, and production will climb for a long time.
Assuming there’s not a massive outside shock that shuts down the entire oil industry.