Saturday, September 24, 2011

Kuroki Field Updated -- Bakken, North Dakota, USA

The Kuroki field has been updated. This is one of the smallest fields in North Dakota. The wells here are targeting the Madison formation, not the Bakken. Well spacing is unitized and the wells are water injected.

On Track for 1,820 New Oil and Gas Permits for 2011 -- Bakken, North Dakota, USA

Based on the number of new permits issued so far this year (1,336), "we" are on track for 1,820 new permits for calendar year 2011.

Life Expectancy of a Bakken Well? -- Bakken, North Dakota, USA


July 4, 2016: I won't remove the post below but there's a lot more to it than EUR; it all depends on what one is measuring. In the early days of the boom, I was interested in the amount of oil that the Bakken would ultimately produce. That's why I placed emphasis on the EUR rather than the other data.

However, for operators, they must have a very complicated formula adjusting for EUR, decline rate, price of oil, cost of well, and, I suppose, several other variables. For a mineral owner, the longevity of the well directly impacts how long one gets "mailbox money." For an operator, by 2016, it was becoming clear that flattening the decline rate was perhaps one of the most important factors, all else being equal. At the linked post, one finds that the decline rate early on was as "bad" as 91% but has since dropped to less than 20% in the Permian.

Original Post
Elsewhere there is a new thread discussing the "life expectancy of a Bakken well."

Here's the issue under discussion: "...factual data on the average lifetime of
a horizontal fracked well in the Bakken."

No one has replied yet.

I have opined on the issue under FAQs. In fact, it's question #2 at that link.

In addition to the information at FAQs (regarding longevity of Bakken wells), the life expectancy of the average Bakken well has been discussed numerous times elsewhere on the blog.

The general consensus is that Bakken wells will produce for 25 to 39 years. But the first horizontal, fracked Bakken well goes back to about 2000. [As soon as I put in any date, someone will write and tell me that there were earlier wells.  Be that as it may, it's my myth that the current Bakken boom began in 2000 in Elm Coulee, Montana, and in North Dakota, in 2007.] So, with the current boom hardly a decade along and even much less than that in North Dakota, we simply don't know how long a Bakken well will last.

Does it even matter?

It's the EUR that matters. Having said that, longevity does serve another useful purpose but I will let readers think about that before providing my opinion on why longevity is important.

Rambling on a Saturday Night -- Absolutely Nothing To Do With The Bakken

I've seen these statistics before, presented elsewhere, with regard to household debt.

But seeing it again tonight allows me an opportunity to opine on the issue, something I thought about some months ago.

Here's the issue and the link: household debt ratios at its lowest since the 1990s. I think the reason is obvious. I figured it out months ago and folks are now starting to publicly write about it.

Debt is down because of the housing situation. Prior to the bubble, folks were in over their heads with mortgages.

There was a push by former administrations (if I remember correctly, it began in the Clinton administration, but the Bush administration continued) to advocate home ownership, removing obstacles, etc., and the government succeeded in its goal. More people than ever owned homes.

Everyone knows the rest of the story.

Now that folks are out from under those miserable mortgages, debt ratios have improved and cash flow for many families has improved significantly. Everyone blames the current economic crisis on the housing debacle. I'm not convinced. I think we are past that. The economic crisis is now due to other reasons.

I knew an individual in my former life who chose to live in an apartment his entire life, along with his working wife. Money was not an issue; they just chose apartment living for reasons other than monetary. I always thought he/she were making a mistake. I never understood why someone would rent rather than buy. I was sucked in like millions of other Americans by the government saying how buying one's home was the way to go.

Folks do not know how expensive a home is until they buy one. There was a movie on this many years ago, called the "Money Pit." Well before the house is paid for, maintenance costs start to rise. Property taxes definitely rise.

I have owned, and I have rented. Up until the bubble burst, I was a "believer" in home ownership. After the bubble burst, I understood better why my colleague and his wife chose to rent all those years.

Painted Woods Oil Field, North of Williston, Update -- Bakken, North Dakota, USA

I updated permits and IPs for the Painted Woods oil field. I was up there the other night and the field was very, very active.

Something I don't understand: the Mortenson well looked very, very good -- many tanks on site, but according to NDIC website the Mortenson permit has been canceled. Unfortunately I did not take a photo of the Mortenson well. I may have to go back up there. There was a "Mortenson" sign, but as noted, the NDIC site said the permit was canceled.

Regardless, the field is very, very active, and thus I updated the data. The field appears to be "owned" by BEXP, EOG, and Zenergy.

NOG: Unique Business Model in the Bakken -- Bakken, North Dakota, USA

Link here.

This is not news to those who follow the Bakken: NOG has a unique business plan. They were early into the Bakken and bought up mineral acres before the boom took off.

They don't drill but they participate with other drillers.

And that's the advantage NOG has. It has now grown large enough that it can participate in more wells, but more importantly, it now knows with better accuracy which areas are better for drilling. They can choose to what level they want to participate, or if they want to participate at all.

NOG partners with more than 20 operators in the Bakken, and thus have gained extensive knowledge about the Bakken, as well as sitting in on meetings with 20 of the best Bakken operators.

So, what does that experience / advantage get them (numbers rounded):
  • 49% working interest in Bighorn 1-6H, Sinclair, with an IP of 1,218
  • 40% working interest in Mustang 1-22H, Slawson, with an IP of 1,829
  • 30% working interest in Alamo 2-19-18H, Slawson, with an IP of 1,287
  • 29% working interest in Porcupine 1-19H, Sinclair, with an IP of 1,531
  • 76% working interest in Probe 1-19-30H, Slawson
  • 57% working interest in Knudsvig 12-1-160-100H 1PB, Baytex
  • 55% working interest in Highland 2-9H, Sinclair
  • 50% working interest in Rose 14799-28-2H, Conoco Phillips
  • 47% working interest in Lori 18-19H, Fidelity
  • and the list is 54 wells long. 

    IPAA Conference Starts This Week -- Many Bakken Presenters

    Link here.

    Should be exciting.

    This will be linked at the sidebar on the right and highlights presented here.

    Week 38: September 17 -- September 23, 2011

    Many, many links this past week to Motley Fool articles on the Bakken; I did not link them because investing is not the primary purpose of this blog

    Widening the road south of Williston

    BEXP: Two more decades of drilling

    North Dakota's 6,000 wells vs California's 100,000 wells

    75,000 more wells to be drilled in the Bakken

    BEXP announces record IP for a TFS well, East Fork oil field

    Spearfish formation excitement

    CCS opens shop in Williston

    Ground breaks for new 270-unit apartment complex

    QEP to put 10 wells on one pad

    Are you a Mexi-CAN or a Mexi-CANT (great movie, by the way)

    Video of house construction in Williston; four or five videos

    Mike Filloon: 11 wells on a spacing unit

    Home of Economy: favorite store in town

    500-Unit Man-Camp Nearing Completion in Watford City

    Cluster of Madison wells in Dublin oil field?

    Widening the Road South of Williston -- Heart of the Bakken, North Dakota, USA

    US Highway 2 is being widened (actually passing lanes be put in) south of Williston to Alexander. Although they are called "passing lanes" the length of these lanes will make this a four-lane undivided highway for all intents and purposes.

    Going up Indian Hill it will actually be 5 lanes.