View from the highway that caught my interest. That is a lot of wells. Photo by James Ulvog.
One of many ways energy wizards are driving down the cost of drilling for oil is putting multiple wells on one site.
7/4 – Amy Dalrymple at Dickinson Press – Bakken multi-well pads getting bigger– The technique of drilling several wells from one site, called multi-padmulti-wellpad drilling, is increasing. Both the number of pads and the number of wells per pad is going up.
For several years now I have noticed multiple pump jacks on one site.
In September 2015, I saw a 15 well pad. It is a few miles west of Ross and about a mile and a half north of highway 2. You can see it on Google maps at coordinates 48.333785, -102.653962, although the satellite photo is really old. It shows only the middle six wells with pumps installed and a drilling rig working on the west row of wells. No progress on the east row of wells.
There is another hint of a whiff in the air that completion work in North Dakota may be picking up.
Federal injunction postpones shutting down all the crew camps within reach of the Williston City Commissioners. Hint of pushback from commissioners since the crew camps are now unlicensed.
Flaring in North Dakota has dropped dramatically in the last two years.
(Have you noticed Amy Dalrymple is the author of a large portion of the interesting reporting in North Dakota?)
Whether a boom time or slow down, all the oil activity has disrupted life in North Dakota. Photo by James Ulvog.
Two reports on the issue of whether transitory housing will remain in Williston: one court case closed with one remaining; city allows another year and a half to remove the camps.
Young guys who moved to North Dakota and decided to stay have brought their wifes to the area and guess what? Lots of them are having babies. By the way, our son is in that category, our daughter-in-law is someone who moved as well, and our grandson is one of the following statistics.
Finally, an indicator why people in North Dakota don’t like all the changes. I get it. Really, I get it: there are ugly sides to economic expansion.
6/8 – Amy Dalrymple at Oil Patch Dispatch – Williston Wins One Crew Camp Court Case, Another Looms – There are two cases and process against the city’s plan to shut down all crew camps. The case in state court has ended with the judge refusing to issue an injunction.
How soon do you suppose these things will again blossom on the plains of North Dakota? Photo by James Ulvog.
Oil prices are moving up and OPEC isn’t planning to do anything to hold down production. Completions appear to be slowly increasing. What price will it take for drilling to increase? Price drop has forced improvements in shale oil and the technical knowledge will not go away when drilling increases.
Copying a line out of an old Monty Python skit, the secretary-general insisted that OPEC isn’t dead yet.
6/1 – Daily Caller – US Fracking Poised for Comeback, OPEC Continues to Flounder– Speculation of different people is fracking to take off again when oil is above $50, others think it will take around $60 for sustained increase in drilling.
Just one of many thousands of reasons OPEC is in distress. Photo by James Ulvog.
A guess on what price will keep the shale revolution going in the very short-term. Background discussions of the impact from the shale revolution: cheap oil era is upon us, oil prices won’t hit $100 again, and OPEC has lost its pricing power. Interview with Daniel Yergin is a must read.
4/28 – The Million Dollar Way – Lifeline for Oil Companies – Here is a guess on the framework for oil pricing, courtesy of Rigzone:
$40 – lifeline for US shale oil
$50 – most shale companies survive
$60 – all thrive
5/4 – Reuters at Dickingson Press – DUCs in a row: Oilfield servicers to gain as more wells completed – Halliburton and Baker Hughes expect a number of Drilled but UnCompleted wells (DUC) to be fracked now that prices have recovered somewhat. They expect the gross number of DUCs to decline.
Update 7-19-16: for future reference, his inmate number is 13523-059. His middle initial is A, for Alexander. Age 40 as of summer 2016.
Update 10-23-18: Mr. Graves is still at Victorville Medium I FCI with an unchanged release date of 12/24/2043. Just 25 years and a couple months to go. His current age is 42, which means he will be 67 years old on his scheduled release date.
I’m not quite sure I understand why he would be at a medium security prison. I obviously don’t understand these things, but seems to me that a drug distribution conviction and five trafficking convictions would land him in a higher security facility.
Some graphs to show the value of oil produced in North Dakota.
First, the value of production by year from 2010 through December 2015.
To show the impact of volume, next is a graph of the volume of production for the year from 2003 through 2015.
Finally, to see the impact of drop in prices is a graph of the value of monthly production from January 2010 through February 2016. Based on information through mid-April, February was the low point in oil prices. There has been an uptrend since then.
Big implications from a few minor shipments of crude. Also, the OPEC+Russia meeting over the weekend did not result in any agreement to hold production at current levels.
4/19 – Bakken.com – Bakken crude sold as export first time since ban lifted– Not a big story by itself but the implications are huge. Hess Corp. shipped the first-ever load of 175K barrels of Bakken crude to an unspecified European refinery.
How much new housing will Williston need in the next few years? None? Some? A lot? Photo by James Ulvog.
A recurring human foible I see is making an assumption that the immediate past trends will continue in a straight line forever.
In the context of crude oil in general and western North Dakota in particular, the question is whether the slump of the last year will continue for an indefinite period of time (measured in years or even decades) or will there be surges in production at various points?
City officials in Williston give every indication of thinking that the boom is over and will never return. Seems like they are preparing for life in the city and surrounding area to have current level of employment plus only slow growth for decades.
I think that reasoning is why there is opposition from public officials to expanding the airport. Why spend any money on a new airport when you don’t need the extra capacity this afternoon and for the rest of the week? There is no reason to go through all the effort of tearing up farmland when the current airport is sufficient for traffic this month. There are open seats on flight to Minneapolis. Why, I’ll bet the airlines could even add a flight or two if they actually get more customers.
Why not chase all the crew camp facilities out of town? They are not needed. There is enough capacity in apartments and hotels to absorb the number of people who are in crew camps this month, so what purpose is there for ever again having any crew camp capacity in the city? Just force the temporary workers who don’t know how long they will be in the area to sign a one-year lease and everything will be fine. In the alternative, they can just stay in hotel that will only cost $3,000 or $3,500 or more per month. Problem solved.
If you assume that oil prices will stay where they are today for the next several decades and if you assume the number of rigs in North Dakota will stay in the range of 20 or 30 or 40 for a decade or two then you should plan for a city with population at about the current level.
If you assume the trends of the last 12 months will continue for decades, then there is no need for new facilities.
Rounding out the picture of North Dakota oil production based on data released by the state on April 15, 2016, here is a graph of the sweet crude prices in North Dakota from January 2010 through April 2016. Quite visible is the dramatic drop in late 2014. Of particular note is prices have recovered in the last two months.
Next is a graph of the rig count by month. You can also see a dramatic drop starting the end of 2014.
Finally is a graph of the fracklog from January 2012 through February 2016. This is the number of wells that have been drilled yet are uncompleted (DUC) meaning the well is drilled to total depth but the fracking has not yet been done. Basically this is a half million barrels of oil put on the inventory shelf until prices recover. That represents nearly a thousand wells than can be brought on-line rather quickly.
Average daily production dropped to 1,118,333 bopd (Prelim) in February from 1,122,462 (revised +352 bopd) in January. That is a mere 4,129 bopd decline, or 0.37%.
Here are a few graphs to paint the story. First average monthly production from 2008 through February 2016 showing total for the state and Bakken field only. Included in that graph is a pro forma of what production would have been (based on my wild guess) if the production increased after the winter at the average rate of increase over the preceding 24 months.
Second graph is average production in the state since 1990. Finally, to show the change since 2010 more dramatically is a graph of production since 2004.
Will we see bunches of those soon? Yes, no, maybe so.
Will production of shale oil recover as oil prices rise? I’ve seen several articles discussing whether that can or will happen. Three articles saying yes, no, and maybe so.
Continental Resources says will start drilling if US crude increases to mid $40 range. Whiting Petroleum will start completing DUC wells if oil is in the low 40s. A year ago comments were that companies would start increasing the drilling if oil hit $70.
Article says Hess reduced the cost of a new well by 28% over the last year.
EOG says they have these rights for 3,200 wells which would produce a rate of return of 30% when oil is at $40.
Implication of these comments is shale production would likely ramp up when prices move into the 40s, perhaps more likely the high 40s. That would create substantial pressure on worldwide oil prices, keeping them from rising too far.
No.
3/15 – Wall Street Journal – Many Shale Companies Are Unable to Ramp Up Oil Output – Article raises a great point that just as output from shale oil has fallen slower than anyone expected, there are different reasons that shale producers may be challenged to ramp up production when prices increase.
