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 good stuff on the Bakken – 9/26

Here’s a few quick notes on interesting news that I won’t cover in a separate post: cost of Bakken wells going up, short-term production drop and long-term increase.

Cost of wells

9/20 – Million Dollar Way – Idle Chatter on Costs of Completed Wells in the Bakken

For several years the cost of completed wells has been dropping. Faster drilling due to general efficiencies and multi-pad sites are major reasons, I think. Costs are going back up. According to the article this is due to using “slickwater” during drilling. It adds a lot to the cost but apparently increases EUR (estimated ultimate recovery, the total barrels of oil pulled out of the site) around 35%.

If you increase a well with 500K EUR by 35%, that is an extra 175K barrels. At around $78/barrel average price of sweet crude in August, that would be an extra $13.8M over the life of the well. That is an internal rate of return somewhere in the range of astronomical. (Very wild guess of around 570% spread over some number of years.)

Costs mentioned in article from a CLR presentation:

  • $9.2M – ‘12
  • $8.0M – ‘13
  • $7.8M – one specific well at unspecified date
  • $10M – early in ‘14

Production forecast

9/18 – Rigzone – North Dakota Governor Sees Oil Production Dip From Flaring Rule Change – Requirement to flare no more than 26% of produced gas will probably require production from some wells to be put on hold until the infrastructure can catch up.

Gas can’t be transported in a truck. It requires a pipeline. Those take a long time to build. Likely to be a dip in production starting next month, per the Governor.

9/3 – Bakken.com – At least 5 more years of planned and sustained growth expected in the Bakken – Speakers at the Williston Economic Summit expect five more years of six percent annual growth. One speaker thinks the population for the three-county area around Williston could go from around 96,000 people now to 133,000 in 2019. High growth is happening across the state. The fourth and fifth fastest growing metros are Fargo and Bismarck.

9/10 – Million Dollar Way – Projected Permits – Calendar Year 2014 As Of September 10, 2014 Here is the count of year-to-date permits to drill in North Dakota as of 9/1 of each of the last three years:

  • 1,575 – 9/10/12
  • 1,736 – 9/10/13 – 10.2% increase
  • 2,028 – 9/10/14 – 16.8% increase

 

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