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 “fracking”

Volume and value of oil production in North Dakota for the last several years

Where you see one well today, eventually there will be 4 or 8 or 12. That concept and the above photo are yet more illustration of why Bakken, Eagle Ford, and Permian Basin, are strategic threats to OPEC. October 2013 photo by James Ulvog.

Let’s look at some longer term graphs of oil production in North Dakota and the value of that production. Here is a view of the annual oil production in the state:

The fascinating insight from that graph is production did not drop in 2015.

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Swings in oil prices and rig count in North Dakota

There is enough untapped oil under the ground for a whole bunch more of those rigs to work in North Dakota. October 2013 photo by James Ulvog.

If  you want to see one graph that explains the swings of drilling and oil production in North Dakota, take a look at this:

The price of oil for producers in the state collapsed in late 2014 due to the OPEC decision to increase production. The price recovered a bit in mid-2015 but continued to drop into the 20 something range.

The price has been steadily trending up, albeit slowly, since mid-2016.

That graph can then explain a lot of other trends.

For example, look at the count of average rigs in operation. The tally dropped dramatically in 2015. It has slowly been recovering since fall of 2016.

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Oil production in North Dakota up 5% in February 2017

Illustration why Bakken and Eagle Ford are a strategic threat to OPEC. Photo by James Ulvog.

Oil production in North Dakota increased 5.38% in February to 1,034,168 bopd (preliminary). This follows a 4.14% increase in January. Two large changes in earlier months were an 8.91% drop in December 2016 and a 7.31% increase in October 2016.

I’ve not posted my usual graphs for a few months. Will get caught up in the next few days.

Here is a graph of average daily production, both state-wide and Bakken-only:

 

Here is a longer term view, with average daily production since 2004:

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Recent counts of drilling rigs in North Dakota

Drilling rig at dawn. Photo by James Ulvog.

The count of drilling rigs in operation across the state has shown strong increase since fall ’16.

Here is a recap of the North Dakota rig count, all from Million Dollar Way. It has been a while since I posted an update.

Keep in mind that the dramatic increase in productivity and production per well means that the number of rigs isn’t anywhere near as important as it was several years ago. At the same time, the count of rigs is still one indicator of activity. Perhaps the long-term trends aren’t important while the shorter term trends are.

Keep in mind I gather data when I think to make notes on the count. Also, I haven’t double checked the numbers, so there very well could be some errors.

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Updates on Bakken

Gotta’ get that well back in production. Crew on workover rig working well after dark. Photo by James Ulvog.

Here are four articles providing a bit of background on what’s going on in Bakken.

You have likely noticed I have long relied on The Million Dollar Way for my education on oil in general and Bakken in particular. Just look at the source for the following four articles. That makes it sorta’ cool when on 3/22 MDW recommended my post Scratching my head at the geopolitical impact of fracking. Thanks for the mention!

2/19/17 – The Million Dollar Way – EURs – Bakken 2.0 – EUR means Estimated Ultimate Recovery, which is the total amount of oil expected to be extracted from one specific well.  Article says the EURs in Bakken were 300K early on. At the point I started paying attention, the EURs were in the 500K range with possibilities of 1,000K.

Article says Mike Filloon has been talking about 1.5M instead of 1.0M.

Now the article lists 14 wells with EURs of 1.5M up to 2.0M EURs.

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Scratching my head at the geopolitical impact of fracking

That little ol’ thing, along with 500 similar contraptions, is changing the world of oil production. Photo by James Ulvog.

Looks like we are in the midst of radical change in regional and world politics caused by the technological revolution in oil and gas production. I keep trying to wrap my little brain around what is going on. Here are a few articles that may stretch your brain too.

  • Brain stretcher on the shift in geopolitics due to increased US oil production
  • Speculation why the Saudi government’s plan to re-engineer their country’s economy isn’t going to work
  • Three articles on the rapidly increased US shale production undercutting the OPEC production cut

3/12/17 – PJ Media – The Problem of Success – Article raises the unsettling idea that nobody has figured out the impact of dramatically increased production in the US.

Neither the previous US administration, the current US administration, leadership in Saudi Arabia, leadership elsewhere in the Middle East, nor even pundits for that matter, have figured out how geopolitics will change as Saudi Arabia loses its role as dominant oil producer and the decentralized American drillers gain the swing producer role.

It stretches my brain even to understand there is an issue.

American frackers used the dramatic run up in oil prices to $100 as an opportunity to figure out how to frack oil where it could never have been touched before. They then used the collapse in prices as an opportunity to figure out how to frack far more efficiently, far more effectively, with far higher production output from every well. As a result, the break-even price for U.S. shale has shrunk.

The vast network of independent producers are responding to price changes far faster than OPEC could handle or the majors could ever dream of. Prices go up somewhat and in about three months US production is surging.

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What Peak Oil? I’m having trouble keeping up with all the billion barrel finds.

15 wells on 1 pad. Notice a drilling rig on right edge of view. September 2015 photo by James Ulvog.

Yeah, I’m still new to this effort of watching the energy field. One of the things that still amazes me is the frequency with which the geology wizards find another billion or so barrels of recoverable oil that ‘we’ didn’t know about and a decade ago couldn’t get out of the ground profitably even if the wizards had known for sure it was there.

3/9/17 – E&P – Repsol, Armstrong Strike Big Oil Find in Alaska’s North Slope – The two companies announced a find in the Nanushuk Play with 1.2 billion barrels of recoverable oil. Two wells confirm the find.

First production is expected in 2021, four years from now. Production level expected to hit 120,000 bopd, or 43.8M barrels a year.

Oh, what Peak Oil?

By the way, I’m having a hard time keeping track of all these massive new finds of oil which either nobody knew about a decade ago or it would have been technically impossible to ever get any of it out of the ground.

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Increasing employment in Bakken?

Workover rig, immediately north of Williston. Photo by James Ulvog.

Workover rig, immediately north of Williston. Photo by James Ulvog.

Update:  Greetings to readers arriving from The Million Dollar Way! Enjoy! Oh, by the way MDW, you are very welcome.  For other readers, if you enjoy my writing on energy in general, Bakken in particular, and the wide open frontier of the energy revolution, somewhere around one-quarter of the credit for what I know goes to the learning provided by MDW.

I’ll make a guess we will be hearing lots more stories of hiring in Bakken. Some recent articles:

  • Two articles on oil companies hiring fracking crews
  • Scuttlebutt is staffing shortages to develop
  • Two articles on Target Logistics converting crew camp into hotel

12/29 – Grand Forks Herald at Dickinson press – Oil companies hiring fracking crews in Bakken – Job Service North Dakota said there are 60 companies wanting to staff up fracking crews. Each crew will need between 45 and 65 workers, so that something in the range of 300 or 350 jobs in the new year.

Let’s extend that out. The Million Dollar Way helps us in a post asking Worker Shortage Looming In The Bakken on 12/30.

It takes about two or three days to frack a well. Assume two wells per crew per week. That would be 12 wells a week for 6 crews, or somewhere around 48 wells in a four-week month. Keep in mind that’s on top of whatever fracking crews are in the field now.

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Oil production in North Dakota drops 1% in November

daily-output-since-2008-1-17

Above graph shows the average daily production in North Dakota statewide and in the Bakken field. Output in November dropped to 1,033,693 bopd from October production of 1,043,318 (revised), a change of 9,625, or down 0.92%.

Mr. Lynn Helms has some observations, reported by Amy Dalrymple, ND Oil Production Stays Above 1 Million Barrels in November.

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EPA study: fracking doesn’t contaminate ground water.

Illustration shows the concept but distorts the proportion. Water is usually 500 or 1500 feet down. Drilling is usually 10,000 or more feet underground. That leaves somewhere around 8,000 or 10,000 feet of solid rock separation. Image courtesy of Adobe Stock.

Illustration shows the fracking concept but severely distorts the proportions. Water is usually 500 or 1500 feet down. Drilling is usually 10,000 or more feet underground. That leaves somewhere around 9,000 feet or more of solid rock separation. Distance between oil and water is about 9 times the distance between the water and the surface. Image courtesy of Adobe Stock.

The EPA spent millions of dollars and five years looking for some evidence that fracking causes contamination of ground water. They only found isolated indications of contamination, nothing widespread, and nothing systematic. Yet their report suggests otherwise.

12/13 – The Daily Caller News Foundation – EPA Says There’s No Evidence Fracking Contaminates Groundwater – The EPA spent five years, working with environmental groups, trying to find evidence that fracking causes contamination of groundwater. Even with five years of effort they could not find any evidence or indication of serious risk, only a few isolated incidents.

In spite of that, EPA withdrew a comment from the previous report that there’s no evidence that fracking causes contamination. The reason they withdrew their comment in spite of not been able to find any evidence? They can’t prove the negative that it doesn’t cause contamination.

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14 wells on one site southwest of Williston, the Atlanta wells – part 2 of 2

14 well pad next to Missouri River with Williston in distance. Photo by James Ulvog.

14 well pad next to Missouri River with Williston in distance, looking northeast. To find the pad, look for the light horizontal patch to the left of the bridge after the road crosses the left side of the river. Photo by James Ulvog.

Previous post described a well pad southwest of Williston that holds 14 working wells. These are referred to as the Atlanta wells.

I got some great pictures of the site from the air and from the ground on my recent trip to Williston.  Million Dollar Way just updated the production information for the 14 wells. So, decided to bring all that info together.

If you want to find this mega-producer, the address is 4750 141st Ave. NW, Williston. If you want to drive there, be advised the road off the 85 shown on Google maps isn’t there anymore. You will need to take a nearby side street. Coordinates are 48.109623, -103.729930 if you want to look them up on Google maps.  The pad is north of the Missouri River and west of the US 85 bridge over the river. 

Statistical data

The Million Dollar Way has been following these wells for several years. Check out this post for background and production data:

Here is some statistical data for the wells.

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14 wells on one site southwest of Williston, the Atlanta wells – part 1 of 2

14 wells on one pad, southwest of Williston. Photo by James Ulvog.

14 wells on one pad, southwest of Williston. Photo by James Ulvog.

There is one site southwest of Williston that holds 14 working wells. They are referred to as the Atlanta wells. Check out the photo above and following.

If you want to find these things, the address is 4750 141st Ave. NW, Williston. Coordinates are 48.109623, -103.729930 if you want to look them up on Google maps. It is immediately to the north of the Missouri River close to the bridge on U.S. 85 crossing the river. 

On my trip to Williston over Thanksgiving 2016 I was able to take some aerial pictures since I flew in on United flight from Denver, meaning we flew in to Williston from the south. I was also able to drive out to the site and take pictures from a public road immediately north of the site.

Six wells on east side of pad. Photo by James Ulvog.

Six wells on east side of pad. Photo by James Ulvog.

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If you like having gas for your car, food in the stores, and turning lights on after dark, here’s good news: Outlook for energy looking brighter.

Gonna' be seeing more of those in North Dakota soon. Photo by James Ulvog.

Gonna’ be seeing more of those in North Dakota soon. Photo by James Ulvog.

Outlook for energy production in the US is getting better and better. Might want to get out your sunglasses.

  • Low oil prices have spurred innovation amongst US drillers; file this under unintended consequences for OPEC.
  • Breakeven prices in US shale approaching that of OPEC producers; ponder that the breakeven price for Saudi Aramco is not the same as breakeven price for the Saudi government.
  • Overview of news in 2016 for oil & gas; good news for companies that survived the year.

12/2 – Tyler Morning Telegraph – Saudis awakened a sleeping giant when they declared war on fracking – Editorial says the Saudis made a serious mistake waking up the slumbering giant of fracking land. The artificially high prices allowed the frackers to get started. The artificially low prices forced them to innovate, cut costs, and start producing at breakeven points competitive to the OPEC giants. Not a good move.

Wouldn’t it be grand if that paragraph was the four-sentence history of fracking?

Production costs are half what they were two years ago.

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More graphs for background on North Dakota oil production in October 2016

Yesterday mentioned there was a big increase in oil production. Up 71,447 bopd in October, an increase of 7.35% for the month.

Here are a few more graphs to tell the story…

Value of monthly oil production, calculated by multiplying the rate cited in The Director’s Cut for average wellhead price in the state multiplied by average daily production. Amounts are in billions of dollars.

value-of-monthly-output-12-16

 

Average daily price in the state. This feeds the previous graph. Notice the substantial up tick in the last several months.

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North Dakota oil production increases 7.3% in October 2016

Those wells are just lined up so nice and neatly. Ponder the millions of gallons of gasoline each will generate. Photo by James Ulvog.

Those pads are just lined up so nice and neatly for mile after mile on each section line. Ponder the millions of gallons of gasoline each well will generate. Photo by James Ulvog.

Production saw a big increase in October. Output climbed from 971,760 in September (final) to 1,043,207 (preliminary). That is a 7% jump, moving production across the 1M point. That is a big increase. Why? Then some comparisons, then a couple of graphs.

Lynn Helms attributes the increase to operators opening up wells that had been throttled back and a few big wells coming on line, according a quote in the Wall Street Journal, North Dakota Crude Oil Output Rises to a Five-Month High. Yeah, the WSJ quoted Mr. Helms. They ran an article the day of his press conference to discuss the monthly report. How ‘bout that?

That is an increase of 71,447 bopd, the largest increase in one month going all the way back to 1989. Other months with increases of 40K bopd or more were:

  • 54,065 – September 2014
  • 52,099 – June 2014
  • 50,845 – July 2013
  • 42,653 – February 2013

That is an increase of 7.35%. Going back to 1989, the only months with a higher increases on a percentage basis were:

  • 10.2% – July 2011 – up 39,351 bopd
  • 10.6% – February 2010 – up 24,958 bopd

Some graphs…

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