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.

Archive for the tag “Bakken”

The work effort driving the record levels of oil production in North Dakota.

Previous post showed a graph of the new records of oil production in North Dakota in recent months.

Let’s look at the drilling and completion work driving the rising levels of production.

Keep in mind that the drastic improvements in productivity has decoupled the number of drilling rigs from the number of wells drilled.

Also keep in mind the ‘fracklog’, or the number of wells in the backlog of wells that have been drilled but not yet completed. In essence, wells are drilled and then left in inventory. When the expectations of prices are right and there are completion crews available, production companies can quickly complete a well and get it into production.

The number of drilling rigs in the field dropped dramatically during 2015. Since the fall of 2016, the count has slowly risen, with a noticeable pickup in the last five months:

 

The number of wells awaiting completion, the ‘fracklog’, has been increasing slightly over the last year but dropped over the last two months:

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Oil production in August 2018 for North Dakota hits another record level

In August the crude oil production in the state hit an average of 1,291,496 barrels of oil per day (bopd). As always, that is the preliminary tally, which will change when a few late reports arrive.

The record high before a several year slump was an average 1,229,572 bopd in December 2014.

In the last five months there have been three record highs with two months barely under the 12/14 record.

Here is my graph of production state-wide and Bakken only (including Sanish, Three Forks, and Bakken/Three Forks levels). Notice the steady increase over the last few months and a strong rise since winter of ‘16/’17.

 

For a far longer perspective, look at the average production data since 1990.  I like this graph because it shows a pattern of explosive growth from about 2008 through late-2014, a drop until around the end of 2017 and a rapid growth since then. The longer view:

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Oil production in May 2018 for North Dakota hits new record level

Multiple pumpjacks on a well pad is a normal thing in North Dakota. Photo by James Ulvog.

In May the crude oil production in the state hit an average of 1,244,629 barrels of oil per day (bopd). As always, that is the preliminary tally, which will change a bit over the next two months as a few late reports arrive.

That is 15,057 bopd higher than the previous record of 1,229,572 bopd in December 2014.

Here is my graph of production state-wide and Bakken only (including Sanish, Three Forks, and Bakken/Three Forks levels):

For a longer term perspective, here is the total monthly production since 1990:

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Value of monthly oil production in North Dakota through April 2018

Fourteen wells are on that pad, which is on the south side of Williston near the Missouri River. Photo by James Ulvog.

Previously discussed the near-record level of oil production in the state during April. Here is the graph of average daily production since 2004:

What is the value of that oil? Multiply those average daily production levels by days in the month and then multiply by the following average sweet crude prices in the state:

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Oil production for April 2018 in North Dakota getting close to record level

There is space for more than 6 pumps on that site. Might be as many as a dozen when fully drilled. Photo by James Ulvog.

In April crude oil production in the state hit an average of 1,224,948 barrels of oil per day (bopd). That is the preliminary tally, which will change a bit in the next report as a few late reports arrive.

That is really close to the record high of an average 1,229,572 bopd in December 2014. Another 4,624 per day would get the state to a new record. That could be achieved for April by late reports from the field. Or, since production increased 42,112 bopd since December, the May data will likely break the record.

Here is my graph of production state-wide and Bakken only (including Sanish, Three Forks, and Bakken/Three Forks levels):

For more background, here is the total monthly production since 2004:

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Volume and value of 2017 oil production in North Dakota

Notice all the empty space on that pad? Notice the disproportionately high number of storage tanks for the number of pumpjacks on site? One day there will be a lot more wells in operation. Photo by James Ulvog.

Before showing the average daily production, annual production, and value of that production, just a note on December 2017 production.

Average daily production dropped from 1,196,976 bopd (revised) in November to 1,181,319 bopd (preliminary) in December, a decline of 15,657 bopd, or 1.31%.

Here is what the average daily production by year looks like. Notice the recovery in 2017?

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Oil production in North Dakota increases 1.0% in November 2017; getting close to record output

Production of crude oil increased 12,110 bopd in November, or 1.02%, going from 1,182,810 (revised October) to 1,194,920 (preliminary November).

The record high production was 1,227,529 average bopd in December 2014. Production in November 2017 is 32,609 bopd below the high in December 2014. It will only take another 2.7% increase in average production to clear the previous record. I’ll guess that will happen in December 2017 or January 2018, before the winter start to cut into production. (That is not a very bold prediction since Mr. Helms thinks the record production level will easily be surpassed regularly in later 2018.)

Above is a graph of average production in the state since 2004.

Check out the following graph for production from only Bakken formations and total for the state since 2008:

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Crude production during October 2017 in North Dakota rises 7%, to 1.18 million barrels a day

The big increase of 78,154 bopd to 1,185,499 bopd follows 4 months of over 1.5% increase each month. That is a 14.8% runup in fourth months.

The record high production was 1,211,330 bopd in June 2015. There have only been four months when the average daily production was higher than in October 2017.

Another 27K bopd increase would put the state at a new record for production. With November and December production stats to go before the weather turns really nasty, that level of increase is likely. (Notice how lame that prediction is? A forecast two months out that is a mere 2% increase, when 8 of the 13 months have seen greater than 1.5% increase and 5 months saw a decline.) For perspective, at mid-December the couple of snow falls received so far haven’t outlasted the sunshine.

In my next post I will scratch my head wondering why the production jumped so much in one month.

Here is the monthly production, with a breakout of oil from the Bakken formation (which also includes the Sanish, Three Forks, and Bakken/Three Forks Pools formations):

 

For a longer term perspective, here is the total production in the state since 1990:

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Average daily oil production in North Dakota down 0.98% in May 2017

Oil production in the state dropped about 1% in May, falling from average of 1,050,476 bopd in April (final) to 1,040,131 bopd in May (preliminary) That is a drop of 10,345 bopd for the month.

Million Dollar Way highlights the NDIC says a shortage of experience workers is slowing down completions.

Article also points out it will take another month to see what impact DAPL will having on the amount of oil shipped by rail. This is a big deal on the revenue realized by producers.

The spread between West Texas Intermediate and what Bakken producers get is about $11 a barrel. That is the cost of transport. The spread is expected to be $6 or $7 for oil shipped through DAPL.

Here are a few graphs to tell the production story:

Average production for state and Bakken only:

Value of monthly production, which seems to have stabilized in the last six months or so:

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More graphs of North Dakota oil production in April 2017

Yesterday’s post described the 2.4% increase in North Dakota oil production. Here are a few more graphs to tell the story.

Here is the average sweet crude price in the state by month:

 

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Oil production in North Dakota up 2.4% in April 2017

Big increase in production in the state. Increase of 2.43%, from average of 1,025,690 bopd in March (revised) to 1,050,630 bopd in April (preliminary). That is the highest average production since March 2016. The April production was only 160,700 below the high water mark of 1,207,276 bopd in July 2015.

 

That upslope since last fall is not quite what OPEC+Russia had in mind.

Million Dollar Way pointed out the production increased at the same time as the number of inactive wells increased and the fracklog increased. I sure don’t understand the dynamics.

Producing wells increased 122 to 13,434; fracklog increased 141 to 830; inactive well count increased 167 to 1,466. Some of that is a recovery from drops in March.

Here is another graph of production, for a longer term perspective:

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News from Bakken oil patch

Rig in western North Dakota. Photographer was given tour of site resulting in many nice photos. “Oil Rig” by Lindsey G is licensed under CC BY 2.0

A few tidbits from western North Dakota:

  • More signs of a rebound
  • Amy Dalrymple joins staff of Bismarck Tribune
  • Dakota Access Pipeline begins commercial operations

6/3/17 – Star Tribune – North Dakota oil industry shows signs of a rebound – Drilling and employment is picking up in the North Dakota oil patch. Article illustrates this by telling the tale of several guys who have been out of work for a while but have been rehired.

Several analysts are quoted saying the industry is bouncing back.

Interesting stats in the article:

  • An oil rig is 13 stories tall, weighs 275 tons, and costs somewhere between $50,000 and $70,000 per day to operate.
  • Rig count: 51 now, 218 at high point in December 2012, 27 at low point in May 2016.
  • Oilfield employment in the state is 16,400 in April 2017, which is up 10% over same month in 2016.
  • Online postings for open jobs were at the highest in April over the last year and are up 94% from prior year. A trade group representative says there are likely 1,000 open oil jobs in western North Dakota.
  • Total production in Bakken is down 1.5% in the last 12 months. Meanwhile production in the Permian basin is up 25% in the last year.

Efficiency drivers:

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Various updates from Bakken

Another dozen reasons OPEC is in distress. Two reasons are quite visible. Another 10 reasons are the open spaces on that large pad where additional wells are going to be drilled someday. Notice the large number of storage tanks, which is far more than what’s needed for just 2 wells. Photo by James Ulvog.

Here is a variety of news tidbits I’ve noticed lately from Bakken:

  • airport construction underway
  • lots more jobs opening up
  • EURs now in range of a million barrels of oil
  • oil starts flowing through DAPL
  • frac sand mines running full steam ahead

4/14/17 – The Million Dollar Way – New Airport Work to Begin Next Week – Official groundbreaking ceremony was in October 2016. The start of massive grading and site work starts the week of April 17, 2017.

4/14/17 – Amy Dalrymple at Oil Patch Dispatch – ND Oil Production Up 5 Percent; Bakken Needs 1,000 Workers to Fill Oil Jobs, Regulator Says – Mr. Lynn Helms, director of the Department of Mineral Resources was surprised by the 5% increase in production in February.

He expects aggressive drilling in the summer, after a lull in the spring due to load restrictions.

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North Dakota oil production steady in March ’17

Average daily oil production dropped 0.83% in March, from 1,034,248 bopd (revised) to 1,025,638 bopd (preliminary). Director’s report for the month is not out as of the time of posting this discussion. This month, I’ll just show two graphs of production:

 

 

Here is a longer term view:

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Graph of daily rig count in North Dakota

Training rig in Williston. September 2015 photo by James Ulvog.

I’ve been watching the tally of daily rig count for a while. When I think about it, I jot down the count listed at The Million Dollar Way blog.  Occasionally, as in every few months, I post my tallies.

By the way, if you have even the slightest interest in my comments on my blog you really, really, really need to read MDW.

Decided to put all that data into a graph to help me see the trends from another direction. So, I combined all the data that has been accumulated haphazardly over time and put it in a graph.

If it helps you see some patterns, I’ll share my graph.

Keep a few things in mind:

  • The data is accumulated when I think of jotting it down, so this is not a complete database
  • Don’t read anything in to the gaps in data
  • Data hasn’t been double-checked, so there are likely inaccuracies
  • This shows general trends
  • The efficiency of drilling and total output from a well has improved radically in the last few years so data is not comparable over long terms

 

Having undercut my data and graph, here is a picture of the rig count in the state:

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