Wednesday, April 2, 2014

Bakken Projections Published In Boston Herald

From The Boston Herald:
Oil production in North Dakota and Montana's Bakken and Three Forks formations will average 1.1 million barrels per day this year, according to estimates announced Wednesday by a research firm.
Wood Mackenzie anticipates that oil production in the North Dakota and Montana sections of the Bakken and Three Forks formations will grow to 1.7 million barrels per day in 2020. [The Bentek study said 2.2 million bopd by 2022, so "we're" in the same ballpark.]
"We're very confident on the future of the Bakken," said Jonathan Garrett, an analyst at Wood Mackenzie. He added that the expected lifetime of a Bakken well is 25 years to 30 years.
Wood Mackenzie projects that $15 billion will be spent on drilling and completion of wells by Bakken participants in 2014.
The research firm also said there is close to $118 billion in remaining value in the American portions of the Bakken and Three Forks formations, which also stretch into Canada's Saskatchewan and Manitoba provinces.
A reader alerted me to the article and made a number of interesting observations about the article.

Two comments: first, one about drilling and completions CAPEX this year; and, second, "remaining value" in the Bakken.

1. $15,000,000,000 / 2,400 wells = $6.25 million / well. A fair number of Williston Basin wells will be very inexpensive Spearfish wells which would bring the cost/well down, but the article specifically says "Bakken participant." Everything I've seen suggests average well costs will be about $8 million at best, and several analysts have said KOG will have rates higher than the average. There must be a lot of very inexpensive Bakken wells on the margins of the Bakken to bring the average down to $6 million / well. One of the few operators who say they can get the cost / well down to about $6 million is Whiting.

2. Harold Hamm suggests the reservoir is close to one trillion bbls OOIP (blogged a long, long time ago). Even at a paltry 5% recovery rate, the total value of the remaining Bakken is staggering, much, much greater than the article above suggests. Even if one assumes half what Harold Hamm says: 500 billion bbls x 5% recovery x $50 / bbl -- the amount is way more than what the article suggests.

Regardless, "fun" to see an article like this in a Boston newspaper. 

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