Predicting Productivity In The Bakken

Wow, timing is everything.

Yesterday I posted a long meandering note on predicating productivity in the Bakken.

Now, a four-page internet article on just that being reported at Rigzone.

We recently authored an article in the Musings discussing the impact of the extremely cold winter on oil output in the Bakken basin of North Dakota.

When we examined the EIA’s March Drilling Productivity Report, we were startled by the chart showing a steady increase in the basin’s oil output and the accompanying forecast for future monthly increases. That shock sent us back to look at all the monthly charts for the Bakken’s output projected by the EIA.

Every month showed a projected output increase. Given what we knew about the production output during the winter months obtained directly from the North Dakota Department of Mineral Resources (DMR) that showed a significant drop in production, and especially Bakken output, which is what dominates the state’s oil production, we wondered about the EIA’s forecasts.

To explore the subject, we plotted the monthly output estimated by the EIA along with its next month forecast. We then looked at what the starting point for production was the next month along with its projected output one month forward. We did that for each month from October 2013 through March 2014, which gave us an estimate of Bakken production for April 2014. Next, we went to the North Dakota DMR web site and got each of the month’s preliminary and revised monthly production statistics for the entire state and for the Bakken formation. All of monthly data is presented in Exhibit 2.

As the DMR data is reported with a lag of two months, the last preliminary monthly output figure for the Bakken formation is for January 2014 of 871,672 barrels per day (b/d). That estimate contrasts with the EIA’s January 2014 projected output of 1,025,000 b/d made in December 2013. That is a difference of 153,328 b/d, or 17.6% of the DMR estimate and 15% of the higher EIA estimate. If we measure the DMR Bakken production estimate against the EIA’s starting point in January, the difference is 15.2%.

A great beginning. And it appears one day after my long meandering article. Gotta love it.

The article ends on an unsatisfactory note.