“I explain to them that the production falls off rapidly from IP, and usually ends up at the 150-200 BOPD mark after a couple of years.”
This, btw, is another aspect of the hype. Specifically:
“This oil field is the future of America! It will be producing oil for the next 80 years!”
Be sure to include those exclamation marks. All those wells will be stripper wells in 5 years. In 80, maybe a handful will still do 2 barrels/day. The rest capped and abandoned. But those handful are there and thus “here we are 80 years later, still producing!!”
This is why reserves are not the critical parameter. Extraction rate is the critical parameter because rates are what consumption is all about. Extraction rate (aka production, but I’ve always hated calling it “oil production” — Mother Nature did the producing, the industry is just extracting it) is how one measures oil.
Don’t know if you guys have seen the study. Some Norwegian reasonably smart guy has looked at first 12 month output of Bakken wells now, vs first 12 month output of Bakken wells a year ago and two years ago. Just the first 12 months.
The number is falling. The conclusion he suggests is the low hanging fruit, the highest odds for big flow, were drilled first. Thackney guy up above noted that I quoted 1200 bpd as initial flow and that the graph showed lower. This is likely part of the same thing.
This field is just flat out overhyped.
Sure, there are sweet spots, and these have been noted since development began. The initial barnburner discoveries near Stanley ND, and elsewhere in the basin had wells IP at over 3000 BOPD or equivalent. Not shabby at all. Other areas will produce less, and some not at all. I've worked wells which fit all of those, from a regional recordholder to a couple which fell outside the productive area, to wells in between, and have worked over 100 of the Bakken and THree Forks wells now.
The Three Forks, BTW was completely thought to be nonproductive.
Oops, but there is a gain to be had in that as well.
Believe it or not, even after over twelve years of working these wells, we're still developing new technologies to drill them faster, better, and produce them more efficiently.
Now, let me put this in perspective. In the Williston Basin, oil was first found in the 1950s. In that time wells have produced oil and/or gas commercially from eighteen different geological formations varying in age from Triassic to Cambrian.
Horizontal drilling has been applied to the Bakken, but I have worked horizontal wells in the Ratcliffe, Midale, Stonewall, and Red River, as well as the Bakken and Three Forks. Other formations may lend themselves to this production technology.
Prior to horizontal drilling, a 100 BOPD well was considered a fairly good producer. I'm not sure of the number, but, iirc about 30% of US production comes from stripper wells producing under 20bbls of oil per day. They all contribute.
The Williston Basin has been producing oil for 60 years. One of the early fields I worked in, doing re-entry horizontal wells proved the concept: Carbonate reservoirs are anisotropic, and even on a 160 acre spacing, did not yield their full load of oil after twenty years of production: the changes in production volume and even an increase in gas produced in one well when two laterals were drilled at 90 degrees to each other 1 year apart proved this.
Please note that another misleading bit of hype about the Bakken is that it is shale oil. The source rock for the oil is the Upper Bakken Shale, and where present, the Lower Bakken Shale, but the rock in the Middle Bakken is a combination (depending on where you are in the Williston Basin) of micricrystalline to fine crystalline dolomite, siltstone, sandstone, and fragmental limestone. This rock has porosity, even if the natural permeability is low as a rule, and because of the complex nature of the lithology involved, may not register correctly on porosity logs. The ability to model the rock types more efficiently based on density and sonic logs, and to better estimate porosity may yield better production forecasts.
The Basin will be producing oil for a long time to come, as long as there is a market for it.
The only questions are "How Much?" and from "Which Formation?"
As far as hype goes, actually, efforts have been made to NOT hype it, from reserves estimates to recovery estimates, by both the State and the USGS.
If you've been reading pump and dump stock newsletters, you might be getting a different story.
The rest of us (in the oil industry) can't just pull stakes, cash out and move on to selling electronic widget company stock next week.
Because I am a professional geologist, and I live in the Williston Basin, I make a point of never overselling the idea, and would lose credibility among my peers and the public alike if I portrayed the drilling boom here as anything it is not. I have seen booms come and go, and always have been one to preach economic caution in spending habits, both from the public coffers and in private life as well.
There will be plenty of fancy cars and bigger houses available when things slow down in due time, at relatively cheap prices.