Friday, August 31, 2012

For Newbies: A Quick Look Where the Bakken Is Headed: S T A G G E R I N G

Link here.  (regional links break early and break often)

How many wells in a 1280-acre spacing unit: the number could be in the teens -- Director, NDIC.
In fact, Helms says the state just issued a permit for the largest drilling pad in the state history - a pad to allow many wells at one site.

"We just permitted for Contininental Resources the largest oil pad we've permitted so far just outside of Williston, it's got 14 wells and will extract the oil from the Missouri River bottoms where there was flooding last year."
A bit of inconvenience for awhile:
He admits that for the people living along a road where there once was one well and will someday be a dozen or more are going to be unhappy with the thousands of trucks that'll have to travel that road. But he says the bigger picture is that the state will be able to keep multiplying its oil production while keeping the adverse impact on the countryside as small as possible.
This is from today's posting of what operators are asking to drill in the future:
  • 18670, CLR, Oakdale-Bakken, 18 wells on each existing 1280-acre unit; Dunn
  • 18671, CLR, Elm Tree-Bakken, 18 wells on each existing 1280-acre unit; McKenzie
  • 18672, CLR, Antelope-Sanish, 18 wells on an existing 1280-acre unit; McKenzie
  • 18621, Hess, Alkali Creek-Bakken, 10 wells on each 1280-acre unit, and 20 wells on each 2560-acre; McKenzie, Mountrail, Williams
  • 18622, Hess, Robinson Lake-Bakken, 10 wells on each 1280-acre unit, and 20 wells on each 2560-acre; McKenzie, Mountrail
  • 18623, Hess, Alger-Bakken, 10 wells on each 1280-acre unit, and 20 wells on each 2560-acre; McKenzie, Mountrail
  • 18624, Hess, Manitou-Bakken, 10 wells on each 1280-acre unit; Mountrail, Williams
  • 18625, Hess, Big Butte-Bakken, 10 wells on each 1280-acre unit; Mountrail
  • 18626, Hess, Baskin-Bakken, 10 wells on each 1280-acre unit; Mountrail
  • 18627, Hess, Beaver Lodge-Bakken, 10 wells on each 1280-acre unit;  Williams
  • 18628, Hess, Capa-Bakken, 10 wells on each 1280-acre unit; Williams18629, Hess, Hofflund-Bakken, 10 wells on each 1280-acre unit; Williams, McKenzie 
  • 18781, EOG, Squaw Creek-Bakken, 3 wells on each existing 320-acre unit; McKenzie; this translates to 6 wells on a section -- remember, at one time, folks in Williston were talking about one (1) well in each section would be exciting
By the way, I've argued that larger spacing units are good for everyone. When I took a poll, I was in the minority. Maybe some day I will get around to explaining why larger spacing units are good for everyone. My assumption is that over time, folks will figure it out for themselves.

12 comments:

  1. Yup. Back when Brigham was run by "Bud" their presentation's predicted as many as eight wells may possibly be drilled in a spacing unit. It was very early on to make such a prediction.

    I remember there were many naysayers at that time and claims were bantered about that Brigham was just pimping their stock and this would never be a reality.

    Also, remember the discussion a while back over at the other site were a highly regarded individual made it very clear that only one (1) well is needed to effectively drain a 1280 acre spacing unit? This claim was said to be true even with the well offset to the setbacks on either side of the drilling unit. Ha.

    It also was strongly suggested that the only reason the operators are drilling extra wells in a unit was to expedite recovery. ?????????

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    1. We are on the "same page of music."

      The interesting thing is this: folks like Bud Brigham and Harold Hamm promoted the Bakken to spur folks into action. The operators needed the infrastructure and, unfortunately, that lagged, particularly takeaway capacity, housing for workers, maintenance of existing roads, and building new roads (truck reliever routes; widening lanes).

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  2. There is a lot of catching up to do. Besides the obvious just mentioned, behind the scenes I am sure NDIC is also overwhelmed with getting permits out the door. One eco pad that I am aware of because we have mineral acres on the drilling unit, related to case 17003 which was heard in February. CLR requested an expedited approval as they had a new walking rig scheduled to be delivered and was hoping to start drilling in April. Here it is almost September and no permits have been issued yet.

    I think once infrastructure and the approval process get caught up I predict another surge in drilling and a big surge in production.

    If Harold Ham is right and there are 48 billion barrels of recoverable oil and say it takes 30 years to drill and another 30 years to produce that is equal to over 2 million barrels of oil a day for 60 years!

    That's going to take a lot more take away capacity.

    After we catch our breath from that growth spurt maybe by then we can start to grasp the impact of a secondary recovery program. I have heard Harold Ham say several times that he feels the secondary recovery program in the Cedar Hills field will be a model for the bakken. The secondary recovery program there has done a lot to help the productivity of Red River B.

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    1. That's interesting. It might have been a year ago that I heard complaints about the permitting process. I had not heard anything since, and thought things were "fine." Maybe not.

      September's hearing dockets will just flood the system (again): 18 wells on 1280-acre units were being requested -- that equates to 9 wells/section.

      But you are correct. I think the pad drilling is going to overwhelm workforce, roads, ceramics/sand, and takeaway. Will it ever get caught up.

      And to think that some folks were concerned about decreasing rig numbers.

      Thank you for taking time to write such a long, informative note. Thank you.

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  3. When in I was in Chicago in July for a Bakken real estate conference, I was a number of proposals for new motels in the Bakken. Dickinson, Watford, Williston, Minot, all the usual suspects. The question kept coming up, "isn't this to many motels?" The same could be said for apartments being built, new housing etc.. The answer, and again this answer is coming from the developers trying to raise money, the cities wanting more to be built, just people wanting to keep the momentum going was "there are 25,000 people in Crew Camps". This point has been in the back of my mind and I kept thinking why is this significant.

    Well this KX News story puts its into some perspective. I will use round numbers. If the oil companies are truely going to drill 10 wells for Spacing Unit. In one township the following occurs. A town ship is 6 miles by 6 miles. 36 square mile or 18 spacing units. So in this 6 square mile drop, potential for 180 wells. 20 days per well, that is 10 years to drill. Stop and think about this. If you are working on this rig and know you could potentially drill in a 6 mile by 6 mile area for the next ten years, you know what that means to me? You move out of the man camp an into a house. You don't commute back and forth to Tulsa or OKC, or wherever the flights that land every Tuesday/Thursday in Minot come from.

    The comment that Harold Hamm has made for the past 2 years and what the media is now using, Manufacturing versus exploration. Manufacturing of the bakken can give communities, builders, employers a comfort level that this is going to keep going. I use the example in Minot. In the last Base realignment commission (BRAC), Minot's roll in the Air Force was expanded. What happened? National chains immediately announced they were coming to Minot. Why? Because of stability of the largest employer in the region. The same can be said for the oil industry, with talk like this and the fact new rigs are coming to the bakken, a committmment long term is being made.

    Kent

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    1. Yes, I've talked about that before: the crew camps get a bit old after awhile. Families will follow their husbands to where they are working.

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  4. Continued.

    I want to focus on the rig count. To much is being made about decreasing rig count. The focus should be on what the rigs are being replaced with. Better rigs. If the rig count was going down and drilling was going down then you have an issue, but the fact the bakken is getting newer and better technology just makes the manufacturing process more efficient. In essence the ND Plant is getting a work over. THis is positive in the fact that they are actually drilling more with less rigs. Which means the state and the bakken has room for more rigs to be brought in. So as the rig count inches back up to the 220-250, the new rigs will be drilling more wells than the old wells. Thus the cycle starts upward again, because no different than Minot and the committment from the military, business and government can make decisions long term, versus the 3-5 year range time frame currently used.

    One last point that isn't reiterated enough. All the talk we hear is about the bakken and how its moved to the manufacture phase. Remember the oil and gas companies are "oil and gas EXPLORATION companies". Exploration in the other fields and formations hasn't stopped. There are 19 other formations that I hear mentioned. These will be continued to be explored and mined.

    Kent

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    1. Yes, the decreasing rig count it is a non-issue.

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  5. I'll be paying attention to the activity related to case 18670. The two 1280s referenced there is also a 2560 which has the Hawkinson Whitman Eco Pad producing. The Whitman MB well is sort of a non factor at this point as I think it is an un-fraced open lateral about 2,000 feet long. CLR quit drilling this lateral as they almost lost control of it. The Whitman TF is the best of the pad with a July production of 36,883 bbls with a cumulative in 11 months of 465,116 bbls. July total for the four wells is 61,646 with an 11 month cumulative of the 4 wells at 854,298.

    So if they add 17 wells to each 1280 (one already exists on each 1280) plus the 4 wells from the 2560 they would have a total of 40 wells on these 4 sections. 4 wells in each of 5 zones? If all drilled from the same section line that would be 40 pump jacks in 4,280 feet with the 500 foot setbacks on each end. Busy place. No longer a tranquil spot for a cabin in the hardwood covered rolling hills.

    The eco pad is on the verge of producing 900,000 barrels in one year from 4 wells. It will be interesting to see what another 34 wells would do on these 4 sections.

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    1. And that's why I love to blog. Thank you so much for taking time to provide such a great comment. I was completely unaware of this (or had forgotten), but this is simply amazing.

      The subject of this post used the word "staggering." I don't think folks could argue. Truly amazing.

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  6. I'm guessing that since they are hinting or suggesting the "exploration" phase is winding down and the development is just starting. It seems the towns to really benefit will be Williston-Watford-Tioga-Stanley. Since most of the development and infrastructure will be developing in these areas, I wonder if we will see less activity (oil wise) in Minot and Dickinson. I think they are suggesting they are not going to be going any farther east or south at this time and concentrating more in the areas they have already drilled...and now going into those same areas and drill some more? Maybe I am wrong.

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  7. That's a great question and not easily answered. There are too many factors.

    But in general, I would agree with you, although I'm not sure what that really means. I'm convinced that there is going to be more activity that we can imagine in Minot and Dickinson. Dickinson, for sure, is going to be very, very busy due to CLR and WLL, particularly with the Pronghorn Sand.

    The Spearfish north of Minot is yet to play out.

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