Tag Archives: Bakken

Beware The Bakken | Zero Hedge

The decline in Bakken oil production that started in January 2015 is probably not reversible. New well performance has deteriorated, gas-oil ratios have increased and water cuts are rising. Much of the reservoir energy from gas expansion is depleted and decline rates should accelerate. More drilling may increase daily output for awhile but won’t resolve the underlying problem of poorer well performance and declining per-well reserves.

Source: Beware The Bakken | Zero Hedge

Oil price goes negative in North Dakota: Bloomberg

Oil is so plentiful and cheap in the U.S. that at least one buyer says it would need to be paid to take a certain type of low-quality crude.

Flint Hills Resources LLC, the refining arm of billionaire brothers Charles and David Koch’s industrial empire, said it would pay -$0.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, according to a list price posted on its website. That’s down from $13.50 a barrel a year ago and $47.60 in January 2014.

While the negative price is due to the lack of pipeline capacity for a particular variety of ultra low quality crude, it underscores how dire things are in the U.S. oil patch. U.S. benchmark oil prices have collapsed more than 70 percent in the past 18 months and West Texas Intermediate for February delivery fell as low as $28.36 a barrel on the New York Mercantile Exchange on Monday, the least in intraday trade since October 2003.




Only 1% Of The Bakken Play Breaks Even At Current Oil Prices – Forbes

Only 1% of the Bakken Play area is commercial at current oil prices based on my analysis that follows.Only 4% of horizontal wells drilled since 2000 meet the EUR (estimated ultimate recovery) threshold needed to break even at current oil prices, drilling and completion, and operating costs.The leading producing companies evaluated in this study are losing $11 to $38 on each barrel of oil that they produce, the very definition of waste.Although NYMEX prices are about $46 per barrel, realized wellhead prices in the Bakken are only $30 per barrel according to the North Dakota Department of Mineral Resources. At that price, approximately 125,000 acres of the drilled play area of 10,500,000 acres is commercial

Source: Only 1% Of The Bakken Play Breaks Even At Current Oil Prices – Forbes

Bakken’s daily production to remain above 1 million barrels

As oil prices continue to fluctuate and North Dakota’s rig count hovers in the 70-rig-range—down from the 190 mark one year ago—the amount of oil produced in the state per day remains at the 1.2 million barrels per day range. The ability of exploration and production companies linked to the Williston Basin to maintain production at 1.2 mbpd despite the major reduction in the state’s rig count due to low oil prices has been surprising to many, including, in small part, to Lynn Helms, director of the North Dakota department of mineral resources oil and gas division. According to Helms, industry has figured out how to manage its cash flow and capital investment while it deploys high efficiency drilling rigs. The money management strategy used with the basin’s best rigs will keep the state producing in the 1.2 million barrel per day range for at least the next two years. Operators can drill wells faster than ever before and do so with less investment into drilling rigs.

“I think people are hoping prices increase and we can go back to a growth mode,” Helms said during his monthly oil and gas industry update. “But, we are capable of sustaining production for a couple of years.”

Due to the production decline curve related to Williston Basin wells completed through a combination of horizontal drilling and hydraulic fracturing, new wells have to continuously be brought only every month for the state to keep its daily and monthly production totals consistent.

The current drilling rig fleet in the Williston Basin can drill a well from spud to total depth in two weeks, a major improvement over the 45-day average seen in 2013. Because the remaining rigs operating in North Dakota are so efficient, the comparison between the current rig total and that of the past when the rig count total was near 200, cannot be made, Helms said.

Rig efficiencies are only one reason why operators have been able to sustain the state’s daily production totals. Well costs are down roughly $1 million, pressure pumping service costs have decreased and individual well production has increased by 25 percent more than the previous year. Because of that combination of factors, several operators have been able to weather the low oil price environment.

In May 2014, roughly 24 wells reported for the month showed an initial production rate of 500 barrels per day or less. This year, zero wells have come in with an IP of under 500. The numbers reveal that exploration and production companies have retreated to the core of the Williston Basin where the best geology and production conditions exist. According to Helms, three wells have come in with IPs over 3,000 barrels per day. “The core area they are drilling in is far more productive,” Helms said.

Despite the 67 percent rig count drop from the previous year, there has only been a 48 percent drop in permitting applications for new wells to the DMR, Helms added. “Companies are still really optimistic about Bakken drilling. It is just a matter of when not if,” he said.

Many entities will ramp up completion and production efforts when West Texas Intermediate prices reach $65/b. When prices reach $70/b, drilling rig activity will pick up. “Companies are positioning themselves for that magic price point,” he said.

via The Bakken magazine – Bakken’s daily production to remain above 1 million barrels.

EIA July 2015 Drilling Productivity Report

Drilling Productivity Report



U.S. Shale Oil Boom Grinds to a Halt as OPEC Keeps Pumping – Bloomberg Business

Shale Oil Production ShrinkingThe shale oil boom that turned the U.S. into the world’s largest fuel exporter and brought $3 gasoline back to America’s pumps is grinding to a halt.

Crude output from the prolific tight-rock formations such as North Dakota’s Bakken and Texas’s Eagle Ford shale will shrink 1.3 percent to 5.58 million barrels a day this month, based on Energy Information Administration estimates. It’ll drop further in July to 5.49 million, the lowest level since January, the agency said Monday.

With the Organization of Petroleum Exporting Countries maintaining its own oil production, U.S. shale is coming under pressure to rebalance a global supply glut. EOG Resources Inc., the country’s biggest shale-oil producer, hedge fund manager Andrew J. Hall and banks including Standard Chartered Plc have forecast declines in U.S. output following last year’s plunge in crude prices. The nation was still pumping the most in four decades in March.

“Production has to come down because rigs drilling for oil are down 57 percent this year,” James Williams, president of energy consultancy WTRG Economics, said by phone Monday from London, Arkansas. “Countering that is the fact that the rigs we’re still using are more efficient and drilling in areas where you get higher production. So that has delayed the decline.”

via U.S. Shale Oil Boom Grinds to a Halt as OPEC Keeps Pumping – Bloomberg Business.

Halcón Resources: Taking Stock In The Eagle Ford

The cadence and timing of well completions have been the primary drivers of Halcón’s production volumes in El Halcón. Even though the company has reduced its drilling activity in the play to just one rig, the completion calendar in April was quite busy, with five new wells turned to sales. This compares to an average of three wells per month during the preceding twelve months when Halcón was running 2-3 rigs in the play.

With five new wells brought online in April, Halcón’s May production in El Halcón will likely remain stable, even if no new wells are completed in May.

As a reminder, East Texas Eagle Ford accounts for approximately one-quarter of the company’s overall production volumes, with the Bakken being a much more significant producing area for the company. However, El Halcón is important to the stock’s valuation due to the asset’s sheer size and significant value potential.

via Halcón Resources: Taking Stock In The Eagle Ford – Halcon Resources Corporation (NYSE:HK) | Seeking Alpha.

Landowners wary of $3.7 billion, 1,134-mile Bakken pipeline project : Business

The company that proposes a major crude oil pipeline for the Bakken says it will minimize impacts to agriculture and use state-of-the-art safety features, but nearly half of the landowners along the North Dakota route have yet to sign on to the project.The North Dakota Public Service Commission will begin holding hearings later this month on the Dakota Access Pipeline, a 1,134-mile pipeline that would carry Bakken crude from North Dakota to Patoka, Ill.The Public Service Commission anticipates a lot of public input on the $3.7 billion project, proposed by Energy Transfer Partners of Houston.Read more: http://billingsgazette.com/business/landowners-wary-of-billion–mile-bakken-pipeline-project/article_0ada306f-6613-5e09-84ee-25109ab36b51.html#ixzz3bOYhzjIJ


Critics press North Dakota to make Bakken oil safer, despite costs

North Dakota environmentalists want oil companies to reduce volatile gasses in Bakken crude. Regulators, however, say they’re taking a different tack that’s cheaper for the industry and still improves safety.

The gasses remain a flashpoint for producers, environmental and safety groups concerned about transporting the highly flammable Bakken crude. Oil train shipments from the Bakken have skyrocketed in recent years, heightening the worries.

Environmental groups have been pushing the state to require that producers install equipment to stabilize the crude using a process that heats the oil to a higher temperature to release more gasses.

North Dakota officials, however, say the more stringent heating requirement would cost oil companies as much as $2 per barrel.

Instead, state inspectors starting April 1 will check oil at well sites to make sure the vapor pressure runs no greater than 13.7 pounds per square inch of Reid Vapor Pressure, the measurement standard of volatile gases in crude oil. Oil involved in a recent West Virginia derailment and explosion had a vapor pressure slightly higher, 13.9 psi.

The North Dakota standard is tougher than the 14.7 psi federal standard for crude oil, although it’s still more volatile than gasoline sold in Minnesota in the summer, which has a maximum vapor pressure of 9.

Regulators say their method will maintain safety but cost an estimated 10 cents a barrel, compared to the $2 per barrel for the stabilization gas removal process. Companies found violating the new regulation can be fined $12,500 per day.

via Critics press North Dakota to make Bakken oil safer, despite costs | Grand Forks Herald.

Moving Toward Crude Conditioning

For Utah-based Profire Energy Inc. the Bakken offers incredible potential for the burner management company. The future of Profire—and other firms capable of managing heating elements on well pads and tank battery sites—is linked to the play’s ongoing push to better control flaring and to condition all crude prior to rail transport. Although the company has operating facilities in Texas, Canada, Utah and the East Coast, it is the Bakken that has the team excited for the future. “We call the Bakken our sleeping giant,” Andrew Limpert, CFO says. “We are just getting started there. Our presence there is more a function of our ability to get there than our opportunities that exist there.”

Profire’s major entrance into the Bakken represents the start of a new era for the shale play. In late 2014, the North Dakota Industrial Commission implemented new crude conditioning rules that will take effect April 1. The new rules require all crude set for transport to meet certain pressure and temperature limits. The limits, the state believes, will ensure that Bakken crude transported via rail matches the volatility levels of gasoline used in car engines or lawnmowers and ensure all entities involved in the movement of the commodity that the crude in the cars is safe and within average volatility levels. Prior to shipment, oil will need to be stored at or below 13.7 Reid Vapor Pressure and at a temperature of 110 degree Celsius.

via The Bakken magazine – Moving Toward Crude Conditioning.