ND breaks 800,000 bpd; drilling still outpaces completions; production ahead of projections

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.

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.

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.

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.

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

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?

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!

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.

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

There are fines and penalties?

Who knew?

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.

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.

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.)

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.

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.

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).

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.

“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

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.