Updates
February 21, 2011: Drilling up to seven (7) wells in one section, one 640-acre unit spacing.
Original Post
It's a slow day for me; I did not get called in to teach today. When I have time on my hands, I tend to ramble. Rational individuals may do well to skip this post.
This goes back to Harold Hamm's position that there is/are 24 billion barrels of recoverable oil in the Bakken and Three Forks formation.
A comment just sent to me from a reader spurred this post. In addition, here's another comment from another who has first-hand experience with CLR's performance (when you get to that link, scroll down to "57seeker," posting January 28, 2011, 2:00 a.m.)
For those interested, this is the link to Dr Leigh Price's original paper that "predicted" the Bakken:
http://www.undeerc.org/price/TextVersion.pdf or click here. (Same links.)
Go to page 238 of that text: it is there that you will find that Dr Price stated that he estimated 413 billion barrels of original oil in place in the Bakken. (Dr Price provides an excellent argument for this number earlier in the text. In fact, for investors, on a "down day" in the market, I recommend you re-read the Price article; it will cheer you up.)
At the time of the 2008 USGS assessment of the Bakken, it was generally agreed that technology (then) could result in recovering two to three percent of the original oil in place (OOIP). I noted early on that it appeared, using different figures, but publicly accepted figures, that companies like CLR might already be recovering six to eight percent of OOIP.
The anonymous reader suggested taking the 24 billion barrels of recoverable oil that Harold Hamm opines and dividing that by Dr Price's estimate of OOIP, 413 billion barrels. Result: 6 percent.
How interesting. Six percent. Exactly what some companies argue they are currently recovering from the Bakken, and not out of line. At the time of the 2008 survey, the two to three percent was estimated well before current technology. Correct me if I'm wrong, but back in 2008, the norm was short laterals with single-stage fracture stimulation. The norm is now long laterals with multiple-stage fracture stimulation, and probably with better mix of proppants.
Just for the fun of it (again this is a slow day for me which gives me a lot of time to play around with the figures), what does 24 billion barrels of oil mean?
Let's say North Dakota maxes out with a production rate of 750,000 bopd. How long would it take to exhaust 24 billion barrels, producing at 750,000 bopd? 32,000 days, or 88 years. That would guarantee life time employment for Harold Hamm's grandchildren.
How many years do the analysts now say that it will take to fully exhaust the Bakken? It is now generally accepted by academic analysts that active drilling will continue until about 2030 and production will peak sometime after than and then decline until about 2100. How many years is it until 2100? 90 years.
Hmmm. Harold Hamm's 24 billion barrels at 750,000 bopd and 88 years is almost identical to the academic analysts' 90 year estimate.
I started this commentary, as I do with most commentaries, not knowing where I will end up. If the commentary ends up being too insane, I delete it, no matter how much time I spent on it. For the life of me I did not expect to see two estimates (88 years vs 90 years) come out so close together.
Check my math. It's too coincidental.
Idle rambling.
i think your thought is dead on..My money has been with Harold Hamm since the ipo date.. the Bakken will be using technology in 2-3 years that is not even in use today..
ReplyDeletego back 3-4 years and you had open hole, 1 stage frac for compleation..
Now the State of ND is looking at mineral deposits in the state suitable for fraccing material.. connect the dots i say..
Thank you for your support. I don't think 24 billion barrels means anything to anybody (it certainly did not mean anything to me -- it's too big a number to comprehend) but when you break it down, it starts to make sense where that number came from. And it certainly is coincidental that Harold Hamm's figures jive so very closely with NDIC's and UND's figures, albeit they come from different perspectives.
ReplyDeleteIs 24 billion/6% based on one well per 1280 acre spacing unit? It is now said that 4-7 wells per 1280 acres is needed to drain a unit.
ReplyDeleteThe BBLS per section are amazing! I f you look at the Cedar hills field (Red River) then look at the Sanish and compare. When the estimates were made I think they were based on 1 latteral per drlg. unit with a scour frac. The financials in the prime areas will result in multiple wells with permeability between wellbores. This I beleive will result in secondary recovery(water/co2 flood)increasing production (eur) per drilling unit far beyond estimates. Look at the activity in the north small ips but a lot of potential. Even the (light) areas drilling has not stopped or even has increased.We can take our walker to the rummy game and talk about it (hopefully in quite some time). See now I am rambling.
ReplyDeleteI agree; I've talked about bbls/section on earlier posts, and have seen the same thing.
ReplyDeleteYou are correct: 4 - 8 wells per 1280 acre spacing in some areas.
ReplyDeleteIn the video, Harold Hamm said "fully developed, four wells per 1280-acre spacing unit, will result in 24 billion barrels of recoverable oil."
His estimate of 24 billion barrels is several times more than other analysts.
The estimate of 413 billion barrels of original oil in place is Dr Leigh Price's estimate. Not all accept this figure.
WIth improving technology, I find the figure 6 percent on the low side. I do not know if Harold Hamm has opined on how much original oil in place he thinks there is.
If Dr Price's estimate was correct (413 billion barrels) and technology improved so that a higher percent was recoverable, the numbers become even more staggering.
At UND a few months back Harold Hamm addressed a group of students and media personal. I seem to remember him saying he figured around 10 Billion barrels would be recoverable given current technology and (implied) spacing.
ReplyDeleteI have a feeling that the boom will continue in North Dakota for a lot longer than anyone expects unless the Government somehow puts a stop to the growth. There are several geologic units that have yet to be fully examined.
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As for EOR on the bakken I'm not going to hold my breath just yet.
(why)
Permeability between wellbores does not exist within the bakken, and it probably never can. If there is permeability between the wellbores it probably means that fracking fluid has made it too far and the sweep efficiency will be exceedingly low for EOR.
The Canadians have had some luck with water flooding, but water causes damage to the bakken in North Dakota. (likely closes the fractures)
I expect to see huff'n puff enhanced oil recovery in the bakken, but it is going to take awhile to shakeout what is effective.
If you go to YouTube:
ReplyDeletehttp://www.youtube.com/watch?v=nM80uuQSsI0
and click forward to 1:15 you will see and hear Harold Hamm specifically say 24 billion barrels, fully developed.
Others support your remarks about EOR. (And yes, I bet there are very few folks who realize that water actually damages man-made fractures.)
My hunch is that new technology, other than EOR, could be another game-changer. The Hess transcript which I linked today suggested as much, and as you mention, there is still the Tyler and the legacy formations.
Did you see the Raymond James analysis posted earlier today on this site suggesting 1.2 million bopd by 2015? That same report suggested that the Bakken could account for 15 percent of domestic production by end of 2015.
Thank you for commenting. It's gonna be an interesting couple of years.