Bakken – Page 7 – Outrun Change

More signs the North Dakota infrastructure is catching up

If you let an economy function, market forces will create pressures to smooth things out. The forces of supply and demand have an amazing ability to balance a temporarily unbalanced marketplace. Several recent articles illustrate this concept in North Dakota.

11/17 – Amy Dalrymple at Dickinson Press – Pipelines now outpacing trucks for gathering Bakken oil – After oil is pulled on the ground it needs to be moved from the well pad to either a rail-loading terminal where it leaves the state by rail or it gets moved to a major transmission pipeline where it leaves the state by pipe.

The oil is initially moved by either trucks or underground pipes.

The number of small gathering pipelines to carry oil away from the wells is finally large enough that more oil is moved by gathering pipelines than by trucks.

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What might North Dakota oil production have looked like without the drop in crude oil prices?

How many rigs do you see? There are 2 clear rigs in addition to the obvious one. High magnification suggests there are at least another half dozen on the horizon. Photo by James Ulvog in October 2014. — How many drilling rigs do you see? There are 2 rigs for sure in addition to the obvious one. Looking under high zoom suggests there may be another half-dozen on the horizon. Rig towers are much wider than power poles and shorter than the radio tower. Photo by James Ulvog in October 2014.

Just as a matter of pure speculation, I wonder what production of crude oil might be if OPEC, I mean Saudi Arabia, had not opened the production spigots in late 2014?

What might the output be if growth continued at the rate of the last few years?

I tried graphing the production trend assuming the growth in output continued at the average rate of the last two years.

First the graph showing my guess, then my assumptions:

Now my assumptions.

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Near-term forecast for Bakken production

Amy Dalrymple reports comments by Mr. Lynn Helms on what might happen in the Bakken oil patch over the next six months. Her article is at Dickinson Press on 12/9: Low oil prices for some drillers to sell; but new operators the opportunity.

First point in the article, which drives the headline, is a number of operators have sold 710 wells to operators moving into the state. Obviously the prices are based on what crude is going for now, which means these are long-term bets that prices will be substantially higher in a few years. If those bets are correct, the new players will score big. In the meantime cash-pressed operators are selling off peripheral assets so they can stay alive to focus on core assets.

General directions for 2016

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North Dakota oil production increases half a percent in October ‘15

Average daily production in the state increased from 1,162,159 average bopd in September to 1,168,950 bopd in October. That is an increase of 6,791 bopd, or 0.58%, just over half a percent.

Fracklog dropped from previously reported 1,091 to 975. That is still a huge amount of oil sitting on the shelf, just waiting for a frackjob to start producing.

Not quite what OPEC, I mean the Saudis, had planned when they adopted their plan to take out US shale.

Average price of sweet crude in the state is $27.00 now, was $32.16 in November, and $34.37 in September. That info from the Director’s Cut. That is really low.

That is perhaps what OPEC, err, the Saudis, were thinking.

Here are my regular basic production graphs. Won’t have the others this month.

Still looks sort of like a plateau.

Here is the long-term view:

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More impact from low oil prices

Pumps on new wells being installed in 9/15. Not exactly a sign of a collapsed industry. Photo by James Ulvog. Check out that beautiful sky.

Two previous posts discussed OPEC’s decision to maintain production and some of the implications. Here are a few more articles on the impact of low prices. Also, great illustrations of how the assets will be bought up by stronger players at bargain prices.

12/4 – Reuters media at Dickinson Press – Shares of Bakken Shale oil producers plummet after OPEC decision – Lack of a production cut and realization that OPEC production will actually exceed their announced limit combined with Iran ready to jump into the market pushed oil prices down. That in turn pushed down stock prices of North Dakota producers.

One industry representative is quoted as saying OPEC’s goal is to

“… outlast {U.S.} shale oil exploration and production…”

Yeah, I think that’s the worldwide consensus on the OPEC, I mean Saudi, goal.

12/1 – Dickinson Press – US oil companies’ restructuring plans founder as prices plunge – Continue reading “More impact from low oil prices”

Update on the oversupply of oil; Saudi plans

15 wells on one pad with room for another 15 wells. Drilling rig in background. Goal of OPEC is to shut down those wells. Photo by James Ulvog. — Fifteen wells on one pad (15!) with room for another 15 wells. Drilling rig in background. Goal of OPEC is to shut down those wells. Photo by James Ulvog.

Doesn’t look like Saudi Arabia will be cutting back production anytime soon. Seems they want to keep crude prices low. Drillers are responding creatively to the price pressure.

10/2 – Bloomberg at Calgary Herald – Drillers taking it slow on shale wells in bid to squeeze out more oil – Drillers are intentionally slowing down initial output of shale wells. That is called choking back. Apparently this has the effect of keeping more frac sand in the ground instead of being flushed out with the high initial flow of oil. Article says drillers choking back are seeing higher total recoveries from their wells than other drillers.

In addition to increasing production, this defers some production to later, when prices are expected to be higher.

This also means that initial production amounts (IP) are not necessarily an indicator of the estimated ultimate production (EUP).

In addition, this suggests total production from Bakken and Eagle Ford won’t be dropping as quickly as you would expect by the drop in drilling rigs.

Finally, you can file this in the category of human ingenuity always increases production. Also, file this under Peak Oil Is Still Wrong.

11/8 – Financial Times – Saudi Arabia will not stop pumping to boost oil prices – Links to the paper indicate Saudi Arabia has no intentions of dropping their production. They intend to keep prices on the worldwide market very low.

Continue reading “Update on the oversupply of oil; Saudi plans”

Megapads in Bakken

One thing that struck me during my September 2015 visit to Williston is the number of well pads with lots of pumps. Two years ago I was impressed by two or four pumps on one site. This trip, I noticed a lot of pads with 6 working pumps and lots of pads that were far too large for the one or two pumps in place. Obviously there are plans to put more wells on each of those pads.

The most amazing sight for me was a pad with 15 wells. Yes, 15. There are three in a row on the west side of the pad, six in a middle row, and six more in a row on the east. Will have several more shots of the site included in this post. The pad is at the end of a private road so all the pictures I have were taken from the nearby public roads.

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More November data on North Dakota oil production

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Here are a few more graphs on crude production in North Dakota as released by the state on 11/13/15. First the fracklog and then the number of working rigs.

Fracklog for September is 1,091. That is the estimated number of wells waiting to be completed. They are drilled to depth, temporarily closed, and only need to be fracked in order to start producing.

$fracklog 9-15$

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North Dakota oil production drops 2.1% in September, to 1.16 million barrels a day

[youtube=https://www.youtube.com/watch?v=3ZYVN_7PG_M]

The September production was 1,162,253 BOPD, which is down 2.14% for the month. That is down 5.3% from the peak of 1,227,329 in December 2014.

Here are a few production graphs.

Statewide and Bakken/Three Forks production since 2008:

Monthly average production since 1990:

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Williston moving forward with plan to shut down crew camps. Visible fallacy in city’s reasoning.

Mancamp near Stanley. Photo by James Ulvog.

First read of the action to close all crew camps was approved 3-2. I previously discussed Williston considers driving up housing prices.

11/11 – AP at Bakken.com – Williston moves closer to banning crew camps in city limits – By a vote of 3-2, the Williston city commissioners gave preliminary approval to plan to end all man camps by July 1, 2016.

11/10 – Amy Dalrymple at Dickinson Press – Williston city commissioners vote to shut down crew camps – The motion was approved by commissioners Tate Cymbaluk, Christ Brosteun, and Howard Klug (mayor). It will require a second reading and approval.

Move would shut housing with 3,600 beds. Target Logistics, with a large camp on the north side of town, is currently 70% occupied.

Oil executives said there is still a need for temporary housing for crews that move around based on where they need to work this week or this month. Their concern is workers will leave the area for a location with stable temporary housing.

Apartment owners are concerned about prices dropping and not as many tenants renting.

Continue reading “Williston moving forward with plan to shut down crew camps. Visible fallacy in city’s reasoning.”

Background on new Williston airport and opposition to even building it

This is the size plane the Williston airport can handle. Notice the size of the door for scale. Photo courtesy of DollarPhotoClub.com

The Bismarck Tribune has a good article on the new Williston airport, which is being built outside of town and will handle medium-sized jets. It will replace the current airport, which is in town and has a runway that can only handle smaller regional jets. I picture a runway that can handle 150 passenger jets versus a runway limited to jets that can carry 50 passengers, like the CRJ above.

Two county commissioners don’t see any reason to build the new airport.

The article: Williston airport proponents chart aggressive course.

Current funding plan for new airport:

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Bakken update – Williston considers driving up housing prices. Heat caused 2 derailments in Montana.

City of Williston may likely vote this week to close all man camps within their jurisdiction. Dramatically reducing supply of housing will have the obvious impact of driving up prices. Keep in mind that is a choice of the local government.

Heat is what caused two derailments in Montana back in July. Not the oil that was on board.

Major construction work on Main street is finished.

11/6 – Amy Dalrymple at Dickinson Press – Oil backers push to keep crew camps as decision looms for Williston

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More film coverage of Williston. ‘Blood & Oil’ ratings drop as production run chopped from 13 to 10 episodes.

Update 11/20 – I’m wondering if “Blood & Oil” will even make it through the shortened season of 10 episodes. Wikipedia reports episode #7 aired on 11/8. It had same rating/share as week #6 (0.8/2) with a tiny increase in viewers (up 0.15M to 3.40M, for second lowest showing). Show did not air on 11/15 and is not scheduled for 11/22. Next episode, #8, is scheduled for 11/29. ‘Suppose #10 will ever get on the air? Anyone liking the show might just have to catch it on DVD.

A few articles on shows set in the North Dakota oil fields. One ad libs with locals, one actually has a non-oil plot, and one suggests everyone moving to North Dakota is a low life. Guess I’ve been reading enough lately and am aware enough of what is going on in the Bakken that I can recognize heavy agenda when I see it.

Oh, ‘Blood & Oil”, which I discussed earlier, will only have 10 shows in its first season instead of the originally contracted 13. Their ratings & share is still dropping. If I understand some articles correctly, that means the show is on its deathbed.

10/17 – Dickinson Press – Williston on film – Gotta love the opening sentence!

It’s probably safe to say Williston, North Dakota has the highest per-capital presence of filmmakers on earth.

Continue reading “More film coverage of Williston. ‘Blood & Oil’ ratings drop as production run chopped from 13 to 10 episodes.”

Drillers get additional year to complete wells. Guess on future production. Recent well count.

[youtube=https://www.youtube.com/watch?v=0ks2ua4imgU]

In very big news, Million Dollar Way explains NDIC Gives Operators An Extra Year To Bring Their DUCs On-Line; Flexibility On Flaring Also Announced . DUC means drilled, uncompleted. That is well that hasn’t been fracked yet, part of the fracklog.

Currently a well must be completed, or start producing oil, within a year of the drilling being finished or else. The ‘or else’ is the state gives six months notice to complete and if not done in that cumulative 18-month timeframe, the well must be filled in.

The NDIC just gave drillers permission a total of two years to go from finishing the drilling to starting production.

Continue reading “Drillers get additional year to complete wells. Guess on future production. Recent well count.”

Tag: Bakken