PN Bakken: ‘Wake-up call’

First off, consider that the production thus far has come from a formation previously thought to only be productive in rare localities. Instead, this has opened the door to unconventional resource considerations worldwide.

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.

That’s good data.

Of course stripper wells contribute. They contribute 5 barrels per day. That’s not going to pay the piper.

Global oil production is what, about 75 mbpd? Oil, not low joule NGLs or ethanol. Proper crude oil. Saudi Arabia is about 9.5 of that. Russia is 10.3. That’s 27% of the total from two places that do NOT do stripper wells. Did you know there are, after just what, five years of frantic drilling, more wells in the Bakken than in all of Saudi Arabia, drilled for 65 years? The Bakken is the poster child for destruction of the joules ratio of in vs out.

This is frantic, desperate drilling using millidarcy enhancement methods that KSA never has to use. They have wells that have flowed about 10,000 bpd for 40 years.

“If you’ve been reading pump and dump stock newsletters, you might be getting a different story.”

You must mean the news releases from Continental Resources, the largest company involved who own more leases than anyone else there?

BTW I do applaud the efforts of NDak’s geology folks to slap down Continental Resources’ hype, but they are failing utterly to stop NY Times hype or even Forbes, who have a reasonbly smart oil reporter.

North Dakota just changed the rules on stripper wells, too. Previously, a group of wells in an area could be declared "stripper" wells (under 20 BOPD, and a different tax status) based on the production data from a few wells nearby. Now it is on a well by well basis.

I know of no horizontal Bakken or Three Forks wells which have been reduced to stripper status (in the current round of drilling, not those from the mid-80s which actually targeted the shales), and I have been working these since 2000.

That is a lot longer to get under 20 BOPD than the projections.

The tendency I have seen is for production to level off at between 10 and 20% of IP after a couple of years and decline more slowly from there.

I don't pretend to have all the data at my fingertips, but causing a panic would benefit some operators as smaller players came up short of venture capital and slowed down or sold out causing a sudden surplus of drilling rigs and service companies.

Oil prices versus drilling/completion costs can drive such a deflation of any 'bubble' present, just as we have seen in the housing market adjustments here.

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