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ND breaks 800,000 bpd; drilling still outpaces completions; production ahead of projections
Petroleum News Bakken ^ | Week of July 21, 2013 | Mike Ellerd

Posted on 07/19/2013 1:40:21 PM PDT by thackney

Not only did North Dakota set yet another record high in oil production in May, and not only did the state finally reach a long-awaited milestone — 800,000 barrels of oil per day production — but production in May broke that barrier by more than 10,000 bpd finishing the month with average production of 810,129 bpd. That according to data released on July 15 by the Oil and Gas Division of the North Dakota Industrial Commission’s Department of Mineral Resources.

“May’s production numbers were really a happy surprise,” said Oil and Gas Division Director Lynn Helms in a July 15 press conference. “We finally broke through that 800,000 barrel-a-day barrier, and that’s something we’ve been looking forward to for some time.”

After a period of what Helms had previously called a “sawtooth” trend in production that began in November 2012 and continued through February 2013, followed by two months of small to moderate production increases in March and April (see chart), the May production is getting back to what Helms considers more normal production. “Kind of back to what we normally experience in the Bakken and Three Forks,” Helms said.

Completions backlog

Drilling in May continued to outpace well completions. The number of rigs in North Dakota increased by only one rig to 187 in May, and the number of well completions increased by only 10 in May to a total of 143 for the month. However, those 143 well completions did not even put a dent in the total number of wells waiting on completion, and as of the end of May there were approximately 500 wells awaiting completion, up 10 wells from the 490 awaiting completion at the end of April. The reason for the continued backlog of completions, according to Helms, is the weather. He said May 2013 was the wettest May on record in North Dakota, and he said the road restrictions remained in effect later in the spring than ever. He added that while it never happened, one county was actually considering temporary road closures.

Adding to the backlog of completions is the continued decrease in the time it’s taking to drill wells. Helms said the time from spud to total depth is now slightly less than 22 days. Conversely, the time required to complete wells, i.e., the period from reaching total depth to when the well actually goes on production, has increased from 60 to 70 days and now, he said, it’s up to 92 days. Much of that increase in completion time, Helms said, was due to logistics associated with moving fracking equipment and water to the well sites. However, Helms said this is an area where companies are planning to focus efforts in the coming year in order to improve the efficiency of moving fracking equipment and materials.

However, with improving weather and the lifting road restrictions, operators will be able to begin catching up on the backlog of completions. In addition, he said some operators are planning to bring in additional frack crews and equipment.

Catching up on the backlog, Helms said, will result in increases in monthly production volumes. “We’re going to see even larger monthly increases in production in June and July and August as we use up that inventory and put those frack crews to work,” Helms said, adding that the division is anticipating those monthly production increases to exceed 20,000 bpd through the summer months.

Helms said there is a desire among some operators to increase the number of drill rigs in the state, but added that with the large backlog in completions, he doesn’t foresee more rigs coming in until later in the year when companies get caught up on completions.

Ahead of revenue projections

The 2013 North Dakota legislature based its oil and gas tax revenue forecast for the 2013-15 biennium on a production estimate made in February that projected the state’s crude oil production would reach 830,000 bpd at the beginning of the biennium, July 1, increase to 850,000 bpd in January 2014 and remain at that level throughout the remainder of the biennium, i.e., through June 30, 2015. Based on the February projection, in order to reach 830,000 bpd by July 1, production would have to be near 805,000 bpd by the end of May, and Helms noted in the July 15 press conference that the May production was approximately 5,000 bpd ahead of where it needed to be to achieve the projected 830,000 bpd by July 1. With the anticipated monthly production increases in excess of 20,000 bpd, Helms believes the state could finish the year well ahead of the production estimates used in the revenue projections.

The legislature’s revenue forecast also assumed a North Dakota crude oil price of $75 per barrel for the first year of the biennium, and a price of $80 per barrel for the second year of the biennium. Helms said in the July 15 press conference that the price of North Dakota sweet crude oil at the end of May, which is the equal daily quantity, EDQ, for the month on the Flint Hills market, was $87.94 per barrel. That price was more than 17 percent higher than the revenue projected price of $75 per barrel for this fiscal year.

The price of North Dakota crude oil remained quite steady over the past six months, Helms noted, hovering in the $85 to $87 per barrel range through May. However, as of July 16, North Dakota light sweet crude was bringing $97.25 per barrel on the Flint Hills market. That sharp increase, Helms said, is the result of uncertainty over the export of crude oil from the Middle East in what he calls the “fear premium” that is built into oil prices.

The May numbers

May oil production was a net increase of 16,277 bpd over April’s daily production of 793,852, an increase of slightly more than 2 percent. All together, North Dakota produced a total of 25.1 million barrels of oil in May, up 1.30 million barrels from the 23.8 million barrels produced in April. Natural gas production also increased in May and also set a new record at 900 million cubic feet, mmcf, per day, up 4.5 percent from the 861 mmcf produced per day in April. A total of 27.9 billion cubic feet of natural gas was produced in North Dakota in May, an increase of 7.8 percent over April’s gas production.

The 143 well completions in May brought the total number of oil producing wells in North Dakota to 8,915, a record for the state and an increase of 1.6 percent.

A total of 165 drilling permits were issued by the Oil and Gas Division in May, down from 211 permits issued in May and the 202 permits issued in April.

The total rig count in the state in June was 187, exactly the same as May and one more than in April. As of June 15, however, the rig count had fallen by one to 186. The highest rig count ever in North Dakota was on May 29, 2012, when there were 218 rigs operating in the state.


TOPICS: News/Current Events; US: North Dakota
KEYWORDS: bakken; energy; oil

1 posted on 07/19/2013 1:40:21 PM PDT by thackney
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To: thackney

Jobs are here!


2 posted on 07/19/2013 1:42:47 PM PDT by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: thackney

Wish I was a younger man, I’d high tail it up there for work.


3 posted on 07/19/2013 1:43:38 PM PDT by headstamp 2 (What would Scooby do?)
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To: headstamp 2

Why not Minot? Freezin’s the reason.


4 posted on 07/19/2013 1:45:19 PM PDT by Resolute Conservative
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To: thackney

I’m bad at math. At 800,000 bpd, how many years of supply does the Bakken formation have before depletion?


5 posted on 07/19/2013 1:48:09 PM PDT by henkster (The 0bama regime isn't a train wreck, it's a B 17 raid on the rail yard.)
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To: thackney

And fuel is still approaching $4 a gallon.


6 posted on 07/19/2013 1:48:18 PM PDT by SkyDancer (Live your life in such a way that the Westboro church will want to picket your funeral.)
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To: Southack

How many illegal aliens do they need to fill all these jobs?


7 posted on 07/19/2013 1:48:59 PM PDT by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: thackney

Obama’s people are taking it in the shorts. Gasoline in Chicagoland is around $4.15/gallon for regular. Up in Southeast Wisconsin it is around $3.65.


8 posted on 07/19/2013 1:49:54 PM PDT by UB355 (Slower traffic keep right)
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To: thackney

A friend of mine who works construction went up to ND for a month and made some BANK! He said they are desperate for good contractors up there.


9 posted on 07/19/2013 1:50:04 PM PDT by ponygirl (Be Breitbart.)
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To: henkster

3.6 billion barrels, divided by 800,000 barrels per day, equals 4500 days, or 12.3 years... if no more deposits are discovered there, if no new technologies allow deeper drilling, and if no new methods improve extraction percentages.


10 posted on 07/19/2013 1:52:21 PM PDT by Teacher317
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To: Vigilanteman

The jobs are VERY well-paying, and there is no shortage of applicants. They don’t need to risk fines and penalties by hiring illegals.


11 posted on 07/19/2013 1:53:52 PM PDT by Teacher317
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To: Teacher317

The other variable is increased production and faster depletion. But that is a good rough number. Thanks.


12 posted on 07/19/2013 1:54:21 PM PDT by henkster (The 0bama regime isn't a train wreck, it's a B 17 raid on the rail yard.)
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To: SkyDancer
And fuel is still approaching $4 a gallon.

There are many reasons for that, and few of them have anything to do with the drilling companies.

13 posted on 07/19/2013 1:54:51 PM PDT by Teacher317
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To: henkster

The Bakken Formation and Three Forks Formation, which spans parts of Montana, North Dakota and South Dakota together hold an estimated 7.4 billion barrels of undiscovered, technically recoverable oil.

http://www.reuters.com/article/2013/04/30/usa-energy-bakken-idUSL2N0DH26020130430

While both the production rate, as well as the technically recoverable reserves, are unlike to hold constant, the math would be:

7,400,000,000 bbls divided by 800,000 BPD = 9,250 days = 25.3 years


14 posted on 07/19/2013 1:55:11 PM PDT by thackney (life is fragile, handle with prayer)
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To: SkyDancer
And fuel is still approaching $4 a gallon.

Yep, cut the price of oil in half and watch the production rate fall. This isn't the cheap easy oil of the last century.

15 posted on 07/19/2013 1:56:20 PM PDT by thackney (life is fragile, handle with prayer)
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To: thackney; Teacher317

thackney; I like your number better.


16 posted on 07/19/2013 1:57:00 PM PDT by henkster (The 0bama regime isn't a train wreck, it's a B 17 raid on the rail yard.)
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To: henkster

It depends on which reserve estimate you take. For 18 Billion the figure comes in at 61 years.


17 posted on 07/19/2013 1:58:10 PM PDT by the_Watchman
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To: Teacher317

You need to include the Three Forks as much of the new production is coming from that layer as well. It has been raised again to 7.4 billion barrels.

Bakken, Three Forks resources rise twofold in new USGS estimate
http://www.ogj.com/articles/print/volume-111/issue-5/general-interest/bakken-three-forks-resources-rise-twofold.html
05/06/2013

The latest assessment, which includes the Three Forks for the first time, found the Bakken has a 3.65 billion bbl estimated mean resource—unchanged from 5 years ago—and Three Forks has an estimated mean 3.73 billion bbl. The formations’ combined estimate ranges from 4.42 million bbl, with a 95% chance of production, to 11.43 billion bbl, with a 5% chance.


18 posted on 07/19/2013 1:59:59 PM PDT by thackney (life is fragile, handle with prayer)
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To: the_Watchman

What source claims 18 Billion as technically recoverable?


19 posted on 07/19/2013 2:01:12 PM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

That’s why I used the low 3.6 billion number, and added the codicils about new deposits, improved tech, and improved efficiencies. =)


20 posted on 07/19/2013 2:02:25 PM PDT by Teacher317
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To: thackney; the_Watchman; Teacher317

81 years...do I have 100? 100? Anyone going for 100? 81 years...going once...going twice.....


21 posted on 07/19/2013 2:03:27 PM PDT by henkster (The 0bama regime isn't a train wreck, it's a B 17 raid on the rail yard.)
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To: Teacher317

The Three Forks now has over 1,300 producing wells and has greater reserves than the Bakken. It is misleading to not include it at this point.

https://www.dmr.nd.gov/oilgas/bakkenwells.asp


22 posted on 07/19/2013 2:14:39 PM PDT by thackney (life is fragile, handle with prayer)
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To: Teacher317

To me it’s refining. You can have all the oil in the world but if you pass it through the refining system fast enough what good does it do to have all that oil?


23 posted on 07/19/2013 2:18:42 PM PDT by SkyDancer (Live your life in such a way that the Westboro church will want to picket your funeral.)
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To: thackney
I read a disconcerting article on Fracking yesterday - I think at Bloomberg.

Most Fracking wells are productive only for a year or less, whereas most traditional wells are productive for 20 to 30 years.

Also, unlike traditional wells, Fracking wells have a very high maintenance cost after the initial drilling.

And, most Fracking wells have a “break even” point around $55 to $65 a barrel, which means the price of oil doesn't need to fall all that far in order to put a lot of Frackers out of business.

Finally, in the midst of America's Energy Boom, the price of WTI closed just under $108 a barrel today.

How did that happen!

24 posted on 07/19/2013 2:24:18 PM PDT by zeestephen
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To: thackney

I was taking a figure purported to come from the state of North Dakota in this paper: http://www.nd.gov/ndic/ic-press/bakken-form-06.pdf

The paper was cited in a Wikipedia article. Now that I have read the article, I’m not sure where they got “18 Billion”. Some figures from the paper are far higher.

The estimates for the amount of oil in the ground range all over the map. Furthermore, the estimates of how much is recoverable also range from 1% to 50%.

The price of oil actually factors into the equation. If crude prices increase, then the amount recoverable will also increase since marginal methods will be developed and employed with greater economic rewards.

See also: http://en.wikipedia.org/wiki/Bakken_formation


25 posted on 07/19/2013 2:27:08 PM PDT by the_Watchman
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To: Teacher317

Re: “They don’t need to risk fines and penalties by hiring illegals.”

There are fines and penalties?

Who knew?


26 posted on 07/19/2013 2:27:25 PM PDT by zeestephen
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To: Teacher317
I know. I've see You-Tube videos showing how the recruits come in and work their way up in a short time from living in their camper to living in permanent housing.

That's the entire point: you don't need illegals even when the unemployment rate is, what, 2% in North Dakota?

I was raised in North Dakota and would head back in a heartbeat if I was younger and less settled.

27 posted on 07/19/2013 2:28:31 PM PDT by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: SkyDancer

And WTI crude is over $108 per barrel.


28 posted on 07/19/2013 2:39:23 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
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To: thackney
ND breaks 800,000 bpd;

Only 25 of the 115 oil-producing countries top 800,000 bpd

#26 Argentina produces 796,000 bpd...
#28 Egypt 680,000
#29 Australia 590,000
#31 Libya 504,000
#33 Thailand 380,000
#37 Yemen 288,000
#44 Germany 186,000

The top 3 countries in the world produce 28,800,000 bpd combined...
#4, Iran, produces "only" 4,200,000...
#5 China produces 4,000,000...
ND alone hits more than 20% of China's production.

29 posted on 07/19/2013 2:48:25 PM PDT by Teacher317
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To: familyop
Best to exploit a resource when its value is highest, no?

(ND produces about 1% of the globe's daily production, so Bakken can't greatly impact global prices.)

30 posted on 07/19/2013 2:53:19 PM PDT by Teacher317
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To: zeestephen

As I understand it, it is not so much the “well”, but a particular vein that is being fractured. Once it is dry, a new vein or spider is fractured in close proximity. I just signed a fracking lease not too long ago. Around my “general” area, it is expected they will operate for a couple generations as the drilling and fracturing is starting at a depth of 6000 ft., well below the water table and there is a fat pocket many hundreds of feet thick beneath us.


31 posted on 07/19/2013 2:54:10 PM PDT by Ghost of SVR4
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To: SkyDancer

Interesting comment, sort of like living next to the ocean and nothing to drink. Prices would be buck a gallon if refineries did not ship Gasoline and Diesel overseas.


32 posted on 07/19/2013 3:22:42 PM PDT by Orange1998
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To: Teacher317

True and true. Well said. I wonder if gas prices will go up in the fall. For now, I suspect that refiners and dealers are holding prices down for tourism. The dollar has also been propped up more each late spring or early summer for three years (erroneous propaganda about the Fed lowering rates, stopping stimuli). Nationwide oil consumption was recently down over a million barrels per day from consumption a few years ago (slowing economic activity).


33 posted on 07/19/2013 3:43:38 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
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To: Ghost of SVR4
Re: “I just signed a fracking lease not too long ago.”

All right, Ghost!

Does this mean no more quarterly “FReepathons?”

As to the wells.....

I assume that when a Fracked well goes dry, they just add more pipe into different veins.

I know modern drillers can do miracles at thousands of feet below the surface, so, once again, I assume they keep all the main drill pipes in place, and just branch out from a main connection.

I'm always interested in learning new things, so anyone please feel free to correct me or add important information.

34 posted on 07/19/2013 6:03:21 PM PDT by zeestephen
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To: henkster

“I’m bad at math. At 800,000 bpd, how many years of supply does the Bakken formation have before depletion?”

Not dependent upon production rate

20 years ago no one thought much potential remained in ND

Abundant amounts of oil existing in all areas of the world and technology is what it is about.

God gave us the most natural energy supply ever known

We need to thank Him


35 posted on 07/19/2013 6:43:01 PM PDT by bestintxas (Anyone who votes for Obama after these 4 miserable years needs to take a mandatory citizenship test.)
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