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:
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.
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 verywelcome. 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.
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.
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%.
Drilling rig in North Dakota during October 2013. This was taken same day as previous two pictures. Photo by James Ulvog.
The rig count is slowly increasing. Not a dramatic increase and nothing like the high point, but a noticeable change from the mid-20s in the spring and the 30s during the summer and fall.
By the way, this explains the slight change in employment in Williston mentioned in the previous post.
Here is a recap of the North Dakota rig count, all from Million Dollar Way, other than during my trip to Williston in November 2016.
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:
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:
Expect to see more of those pump jacks soon. By the way, there is room for several more wells on that site. With all those storage tanks on site, there are going to be a lot more wells there eventually. Photo by James Ulvog.
This oil situation getting more complicated:
Saudi Arabia is going to diversify their economy. By moving into refining?
Consensus is only half of the OPEC cut will be realized
Non-OPEC producers agree to 588K bopd cut
Output from China is in natural decline – 300K bopd drop in 2016 and another 200K bopd in 2017
What diversification? 12/1 – Wall Street Journal – Saudis Wager On Higher Oil Prices to Drive Economic Diversification – The new leader of Saudi Arabia has a long-term plan to transition the economy away from exporting crude oil towards an entrepreneurial economy. According to this article, the first major step in diversifying the economy is a major push into refining and mining.
Maybe it’s just me, but I don’t think that expanding from exporting crude oil to refining crude oil is much of a diversification. Likewise, it is not a big jump to extracting minerals from the ground when the current focus is extracting oil from the ground.
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”
Here are the details from the press release. The “reference” is the baseline agreed upon, which is referred to as the “Reference Production Level” in the press release. The change by country is listed. I calculated the percentage change for each country. Here are the changes:
My guess? Today’s production deal means we will see far more of these things in Bakken and Permian Basin. Photo by James Ulvog. Oh, by the way, that will be a good thing.
My prediction: if the announced target price of $55 to $60 is reached there will be lots of drilling rigs moved out of US parking lots and into the field.
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?
