Posted on 07/04/2014 8:47:07 AM PDT by ckilmer
July 4, 2014 | Comments (0)
As many energy investors know, North Dakota's oil production recently surpassed 1 million barrels a day. Does this mean that the growth story is now over and all the best locations have been drilled, or, as downspacing allows oil and gas companies to target the Three-Forks benches just below the Middle Bakken interval, is the growth story still underway? Only time will tell, but Oasis Petroleum (NYSE: OAS ) is one E&P player trying to shake things up by targeting the deeper Three-Forks formation, and its results look promising.
More than just the Middle Bakken
During the early years of the shale revolution, oil and gas companies were only tapping into the Middle Bakken bench as it was the most economical. But this wasn't properly utilizing the true potential of the Bakken/Three-Forks play, as the Three-Forks was left just sitting there and not producing. Oasis Petroleum saw the possibilities laying deeper down in North Dakota, so it decided to test out downspacing to see if it could drill into both the Middle Bakken and the Three-Forks benches.
Downspacing is where oil and gas players reduce the distance between each well so they can bring more wells online in the same amount of space. Oasis Petroleum was successful in its endeavors, as were many other companies, which is why it's planning on completing 30 wells this year targeting the second and third benches of the Three-Forks while also tapping into the Middle Bakken and the first bench of the Three-Forks.
Production data from current wells targeting the lower Three-Forks intervals look promising, but could be improved. On average these wells have production curves indicative of an EUR (estimated ultimate recovery) between 400,000 BOE (barrels of oil equivalent) and 600,000 BOE. Some wells are outperforming the curve, but there are some wells, like the Bonita, that are producing substantially below the curve. As more wells are brought online that target the lower Three-Forks benches, Oasis Petroleum will be able to leverage its existing knowledge and use better drilling techniques to boost the EUR rates and not produce duds like the Bonita.
Also, if the EUR spread could be improved to 500,000 BOE-600,000 BOE (for example), Oasis Petroleum would be consistently producing a lot more oil per well. Beyond boosting EUR rates, Oasis Petroleum is opening up more drilling locations through downspacing by targeting the lower Three-Forks benches, which increases its recoverable reserves. To take a look at what a bit of expertise can do to well production, look no further than "King Bakken" itself.
The king of downspacing
As the biggest player in the Bakken/Three-Forks play, Continental Resources (NYSE: CLR ) has been the trend setter for downspacing projects. One example of its expertise being effectively put to work can be found at its Hawkinson project, which had 14 wells tap into four oil producing intervals, ranging from the Middle Bakken down to the Three-Forks. The Three-Forks shale has four benches, three of which were tapped into via the Hawkinson.
Out of the 14 wells, 13 had production curves that were on average trending 50% above a 603,000 BOE EUR, which means that this method of downspacing couldn't possibly be interfering with production at nearby wells (the biggest concern with downspacing). Continental Resources was also able to show off its ability to utilize better drilling practices to bring more productive wells online in the future. After the Hawkinson produced such amazing results, Continental Resources decided to take it one step further with the Rollefstad project.
The Rollefstad is very similar to the Hawkinson, and the results were just as encouraging. On average, Rollefstad wells tapping into the Middle Bakken and first bench of the Three-Forks (TF1) had IP (initial production) rates of 2,960 BOE/d, versus 1,330 BOE/d for existing Middle Bakken and TF1 wells. For wells targeting the second and third benches of the Three-Forks shale, they had IP rates averaging 2,650 BOE/d.
This is quite amazing and proves that the Bakken/Three-Forks play still has plenty to give operators like Oasis Petroleum and Continental Resources. Some analysts see the growth story slowing down, but with results like these it's hard to see North Dakota giving up without a fight. Continental Resources, due to its size and recent string of successes, will probably keep leading the charge deeper into the Bakken/Three-Forks, with Oasis Petroleum not far behind.
Foolish conclusion
By perpetually pushing the limits of downspacing, Oasis Petroleum and Continental Resources have been able to prove that the Three-Forks is a very economical play to tap into. As more E&P players tap in the second and third benches of the Three-Forks, those benches will become just as "conventional" as the Middle Bakken itself. One bench is still being left out, and when Continental Resources decides on what kind of pilot projects it wants to embark on next I would hope it attempts to target the fourth Three-Forks interval.
Naysayers see North Dakota's hydrocarbon driven growth story petering off in a few years time, but as history has proven before, Peak Oil is still a long ways away.
Oasis Petroleum appears to be the second company after Continental to get promising results from the lower benches of Three Forks.
Was strikes me about this article is that it is written in the language of geologists and entrepreneurs plying their trade to produce oil by leveraging their knowledge, experience, and business instincts to produce something that America needs. Consider what comes out of the mouths of politicians and bureaucrats. None of this, to be sure. What they feed us is environmental dogma devoid of science, technology, and economies and designed soley to further their political power. I think I’ll go with the geologists.
I’d like to see the tracer analysis on their interference tests. I bet there is a whole lotta sharing going on.
What have they done to the earth?
What have they done to our fair sister?
Ravaged and plundered and ripped her and bit her
Stuck her with knives in the side of the dawn
And tied her with fences and dragged her down
-Jim Morrison
What have they done to the earth?
..........
Patience.
There’s already 2 companies formed that are surveying the asteroid belt in search of asteroids that have highly profitable elements for mining.
What will happen in the solar system over the next 500 years will be much as what happened to earth over the last 500 years.
Not to put a fine line on things...the world we have today is unsustainable with current technology and resources.
Everything has to be taken up several notches in order to have a successful 21st century.
That is just as coal and steam power of the 19th century displaced water wheels of the 18th century,.... so also in the 20th century internal combustion engines and electric motors displaced steam power of the 19th century. Then again in order to have a successful 21st century the world has to create energy several magnitudes higher than was done in the 20th century.
And it will happen. Just you wait and see.
Nothing like the spritely, upbeat "DRILL BABY, DRILL!!!"
The question is, if the world is at war, will any nation be able to do so?
The Lower Bakken Shale is considered to be the source rock, with the oil having migrated into the Three Forks.
That said, good for Oasis, there is plenty of 'pie' up here, and their success as well as Continental's means more work for us all.
You have nailed it, the perfect emotional appeal to sheer nonsense. It works for those who sell music I suppose. The rest of us need to find something else.
Yeah when I was young I used to love Jim Morrison. In fact, I only just barely escaped from that life.
What I missed about the lyrics above when I was young was the sheer arrogance of it. For example for a time you might get polluted skies dirty water or denuded hillsides. But only for a time. People will die. But nature adjusts. Nature is infinitely greater and more powerful than man and God is infinitely greater and more powerful than Nature.
The Lower Bakken Shale is considered to be the source rock, with the oil having migrated into the Three Forks.
...............
This is counter intuitive. Why? Because the Three Forks formations are BELOW the Bakken Shale. One would think that the natural direction of oil would be upward toward lower pressure.
Is it the case that the “assembalge of shale, siltstone, sandstone and dolomite, interbedded, and in places, interlaminated” is more porous and/or has a lesser density/pressure than the Bakken shale above.
But then, anyone in this business can tell you about overpressured zones and lost circulation zones, the former with unusually high pressure, the latter with lower than gradient pressure. It isn't that unusual if you think about it, just in this instance the oil migrated to the porosity in the adjacent lower pressure zone down section.
But then, anyone in this business
........
Well, I’m not in the business. I just find it to be an interesting story.
-——I think I’ll go with the geologists.-——
So is Obama.
Without doubt geologist’s optimism is affording him the political protection required to allow him to obstruct the Keystone.
“This is counter intuitive. Why? Because the Three Forks formations are BELOW the Bakken Shale. One would think that the natural direction of oil would be upward toward lower pressure.”
Listen to Smoking Joe- he is correct.
Between the two shales the Bakken is supercharged due to hydrocarbon maturation.
At least 2,000 psi above the ThreeForks.
Expelled oil will go downward from Lower Shale
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