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.
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.
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.
Average daily price in the state. This feeds the previous graph. Notice the substantial up tick in the last several months.
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:
A new well is likely to produce about a million barrels of oil, compared to half a million from a well drilled several years ago. Photo by James Ulvog.
A few articles of late:
2 hotels closed in Williston
Ground broken for new Williston airport
Each Bakken well now expected to produce a million or 1.5 million barrels of oil
9/27 – Williston Herald at Dickinson Press – Two Williston hotels closing their doors – An owner of two hotels with total of 105 rooms will be closing them this week. Both are on the market, for $3.0M and $3.2M. One of them reportedly had drugs sales and prostitution on site during the boom.
Don’t worry too much about capacity. There’s a huge number of hotels open in Williston, especially compared to three or four years ago. Also, those hotels won’t be going anywhere. When the drilling picks up, someone else can pick up those empty hotels for a real bargain. When the space is needed, they will be open.
10/10 – Amy Dalrymple at Oil Patch Dispatch – Williston Breaks Ground on New $240 Million Airport – Construction is underway for the new airport. It will have a 7,500 foot runway and four gates at the terminal. The new airport will be able to handle planes that can hold 165 passengers instead of the 50 passenger jets in use at the current airport.
Currently there are five daily flights into Williston, which is down from 11 at the busiest time of the boom.
12/4 – Million Dollar Way – The Bakken: How Things Stand Near the End of the Year 2016– The productivity increase in the last few years is staggering. Here are a few tidbits from the article, which is a survey of recent quarterly releases from the drilling companies.
Estimated Ultimate Recovery, EUR, is the amount of oil to be drawn from the well, I believe with only primary recovery. A few years ago (2011), the typical EURs were 550K barrels from middle Bakken and 450K from Three Forks bench. Continue reading “Random updates from Bakken”
Out of focus photo by James Ulvog. (Yeah, yeah, I know – don’t give up my day job.)
First article below says that predicting oil prices is a fool’s errand. The payoff of trying to do so, it seems to me, is it requires diving into the dynamics and trying to understand the production and demand aspects underlying the price of oil. Second article below delves into the dynamics.
Mr. Oksol agrees with the major points: OPEC’s effort (meaning Saudi Arabia) to shut down shale producers has been unsuccessful. They tried this once before back in the 1980s.
On the second point, he agrees shale producers will respond fast to any rise in prices.
Author agrees that the phrase “big bet” is an acceptable way to describe the Saudi strategy to take out shale producers but thinks a more accurate description would be “trillion dollar mistake.” As for me, either description works well.
How much damage has Saudi Arabia caused the shale drillers? In other words will they be able to respond to any change in prices are they out of the game.
If the answer is yes, how fast will shale drillers be able to respond?
We’re gonna’ see a whole lot more of those things in Texas over the next few decades. Photo by James Ulvog.
Oh, by the way, the geology wizards just discovered another twenty billion barrels of recoverable oil where the wizards knew something existed but had no idea how much.
Twenty billion barrels. Billion, with a B.
11/15 – Star-Telegram – Permian’s Wolfcamp formation called biggest shale oil field in US – Estimate from USGS is the Wolfcamp formation in the Permian Basin holds 20 billion barrels of oil. There are four layers of shale that make up Wolfcamp. That puts this find somewhere in the range of three times the size of the entire Bakken formation in North Dakota.
I don’t know who owns those wells, but use this picture as a visual that shale companies in bankruptcy haven’t stopped pumping oil. Photo by James Ulvog.
The concept that one should not bet against human ingenuity is key to realizing we won’t run out of oil and there won’t be a sustained runup in prices anytime soon. A few articles showing why I say that. Articles also show the severity of the catastrophic mistake made by the Saudi government.
There is a difference cutoff for the breakeven price of the company Saudi Aramco and the country Saudi Arabia. US shale producers can crank out tons of oil at prices far below what the Saudi government needs to survive.
Huge Kashagan oil field in Kazakhstan starts producing
US shale producers in bankruptcy proceedings are producing almost as much oil as the they were before prices collapsed. They didn’t close in their wells.
10/17 – Gary Sernovitz in op-ed at Wall Street Journal – Trimming Oil Output Won’t Keep OPEC States Afloat – Main idea I draw from article is that if OPEC reaches a deal to cut production, and if they get Russia to go along, and if the cut is enough to push prices up the amount they want, and if none of the producers cheat, then it still won’t keep the petrostates funded at the level they need to keep all their social programs going.
That is a lot of ifs and even if they all happen, it won’t matter much.
Amongst the many reasons this is the case, two stand out to me.
First, for the history of oil production, the easiest and cheapest oil to come out of a field is the first drawn. After that, the oil gets more difficult and more expensive. The opposite is happening in the fracking fields. The breakeven price is lower today in Bakken, Permian, and elsewhere than two years ago and the breakeven price looks to be going lower. That means the frackers can keep functioning with low prices and thrive with moderate increases.
Previous post showed the oil production in North Dakota through August 2016. Here is some more info on production in the state. Data is extracted from the monthly “Director’s Report” and historical production data.
Average sweet crude prices for North Dakota oil. This reflects a discount from the West Texas Intermediate due to transportation costs.
Here is the value of monthly production based on actual output multiplied by the average sweet crude price rolled into the preceding graph:
Above graph shows the average daily production in North Dakota statewide and in the Bakken field. Output in August dropped from 1,029,734 barrels of oil per day (bopd) (revised) to 981,039 bopd (preliminary), a change of 48,695 bopd, or 4.73%.
This is the first month with average daily production below 1 million bopd since March 2014.
Here is the average daily production by month since 2004:
Workover rig in October 2014. Photo by James Ulvog.
In contrast to the horrible news mentioned yesterday from Venezuela, consider the the amazing news from the open frontier of energy production. The benefits produced by fracking just don’t seem to stop.
9/23 – The Million Dollar Way –Update On The Bakkan – Lynn Helms – A few highlights in the article from a radio interview I found particularly fascinating:
Production in North Dakota will drop below 1M bopd but Mr. Helms does not expected to go below 900K bopd.
Initial production rates had been 1100 bopd but are now running 1500 bopd.
Estimated Ultimate Recovery amounts have increased one-fourth.
There are somewhere between 8000 and 8500 wells that are good candidates for refracking because they are initially drilled with old technology.
This is astounding – a drilling rig today drills an average of 25 wells in a year compared to only 8 or 9 wells as recently as 2009. Imagine the improved IRR.
Drilling efficiencies have come from multi-well pads, new technology for bits, new technology promoters, and new technology for mud. Ponder the impact of technology.
North Dakota oil pad. Based on the number of storage tanks, I’ll guess there are going to be a whole lot more than two wells on that site. Photo by James Ulvog.
Here are a few recent energy articles of interest.
Saudi government cuts back wages and benefits for government workers because government revenues are down because government drove down oil prices.
Tentative deal for OPEC to drop production and why it won’t matter.
Shale drillers in the U.S. are ready to increase production.
For those at “ministerial” level, pay will be cut 20%. After looking at a few articles, I’m not sure how many people are at the “ministerial” level.
Purpose seems to be psychological, specifically to tell the financial world that the government is serious about cutting costs.
9/29 – AP at Bakken.com – AP Explains: What does OPEC’s tentative deal mean for oil? – The OPEC producers agreed that they will in the near future agree to a production cut. No cut in sight but they agreed they need to pull back from maximum production by everyone.
Total crude oil production in the state dropped 20,419 bopd, going from 1,047,003 bopd in May to 1,026,584 bopd in June. That is a decline of 1.95%. I’ll make a guess that another month or two will see production cross the one million point.
The Director’s Cut is guessing the low prices, and consequent low rig count, will last through third quarter this year or second quarter of next year.
An increasingly rare sight in North Dakota. Not only the active rig, but the flaring as well. Photo by James Ulvog.
Here is a recap of the North Dakota rig count. All of the data is from Million Dollar Way. The number of rigs isn’t as important now as it was a year or three ago, but it is still one indicator of activity. One rig today creates a well that produces a lot more oil that a few years ago, and in less time, and at lower cost.
What answer did you have in mind? Image courtesy of Adobe Stock.
Previously mentioned an agenda-driven research project that was unsuccessful in finding any ground water contamination caused by fracking. Said report will intentionally not be publicized, according to the lead researcher.
Now a report from Duke University looks at above ground spills of brine water and concludes there is “widespread” contamination of water and soil across North Dakota. Been holding this post for while. May as well publish it.
The health department in the state says 1% or 2% of the 3900 spills which have been reported require long-term cleanup. Let me translate that: any spill, even of a few barrels, is required to be reported. Of those spills reported, 98% or 99% are immediately contained and cleaned up. Somewhere between 40 and 80 require ongoing efforts.
