MDW Shorthand -- September 24, 2014

A reader recently asked what the "drl" and "no production data" means in my shorthand, as in this example:

• 25173, drl, WPX, Morsette 35-26HZ, Spotted Horn, no production data.

I discuss my "shorthand" at this link: http://themilliondollarway.blogspot.com/2013/09/shorthand.html.

With regard to "drl" and "no production data," this is the story.

Remember, I have no background in the oil and gas industry and no formal training. This is how I understand it and I am very possibly wrong; certainly I am wrong in some of the details and nuances.

Also, remember that what one sees on this blog or other blogs or at the NDIC site lags what is happening in the field. In addition, the NDIC can only report what it knows, and generally what they report is based on paperwork or some kind of electronic report. Such reports are not always filed in a timely manner. What  is happening in the field, on the drilling pad, may not be reflected in Bismarck.

In addition, this is all dynamic. As soon as something is reported, it is likely to change.

I do not know the nuances, but apparently there is "confidential" and "tight hole." For purposes of this discussion, I assume them to be synonymous; NDIC switched to "tight hole" a long time ago; I almost always use "confidential."

It's a long note; I don't proofread long notes for a day or two (sometimes never); expect typographical and factual errors. I rely on readers to catch significant errors.

For purposes of this discussion we will assume that we can stop the clock instantaneously at the moment the "drl" status occurred.

Let's get started. [This is now question #68 as the FAQ post.]

The clock is stopped.

Generally, most operators ask and are given permission to put their permits/wells on confidential status. When they do that and when the permit/file is put on confidential status is a conversation for a later time (hopefully never).

By North Dakota law, the well has to come off confidential status six months later (interestingly, there are some nuances to this, also, which is not germane to this discussion).

At six months, after the well comes off confidential status, it has to go to some other status. It would be nice if the well was completed and producing by that time in every case. If that were the case, the well would go to A (active) status, an initial production (IP) would be reported, and we would start seeing production numbers.

However, if the well is not completed, regardless of whether it is producing oil or not (yes, a well can be producing oil even if it is not completed), it will likely go to drill (drl) status. [Alternatively, it could become inactive, or even temporarily abandoned, I suppose.]

But in the Bakken, 99% of time that a well comes off confidential status will go to drill status if it is not completed.

If there is production data, it will be reported. If there is no production, then "no production data" is my shorthand.

At this point (remember, the clock is still stopped), there are two possibilities for a well on drl status. The well might be fracked/completed in the field, but the paperwork has not caught up with the folks in Bismarck. If the well is fracked/completed, it is likely that there is already production, and if so, that is reported. If you see significant production from a well on drl status you can assume it has been completed, and fracked if necessary (an occasional Bakken well is not fractured).

If however, there is "no production" reported, then very likely the well has been drilled to total depth (vertical + horizontal) but has not (yet) been fracked.

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Coffee break.

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Once the well is on drl status, it can remain on that status for eternity. That seldom happens in the Bakken.

Let's say the clock is stopped in Bismarck; they still see a well on drl status. But in the field, the clock has started again.

More than likely, the operator will complete the well. In the Bakken, this generally means that the operator will frack the well. Once the frack is complete, the operator will "test" the well for production and report an "intial production (IP)" number to the NDIC in Bismarck. I almost always place the IP in red/bold. 

At the moment the well is completed/fracked/tested (and there are probably some nuances in the reporting date here also), the company has until the end of the following month to report the IP results.

So, for example, if a well is completed/fracked/tested on July 16, 2014, the report has to reach Bismarck by August 31, 2014 (I may have some minor facts wrong here, but in general, I believe this to be accurate).

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Bathroom Break

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To summarize: the clock is stopped in Bismarck, and this well is shown to be on drl status. The clock is now running in the field, and the operator now has a completed/fracked/tested well that is producing Bakken crude oil.

The information is sent to Bismarck at the latest possible date but reaches Bismarck by August 31, 2014 (in this example).

Now, start the clock again in Bismarck. The NDIC folks receive the data, and will post it as soon as possible. It appears that production data is updated monthly in Bismarck. If so, one might not see production data at the NDIC site until the September, 2014, reporting period (in this example).

So, in this case, the well came off the confidential list on the day the well went to drl status. (The NDIC provides the date when wells come off the confidential list.) The well was completed/fracked/tested on July 16, 2014 (in this example) but I did not see it at the NDIC site until the September, 2014, data was released.

Again, once the well is on drl status, if there is production, that production must be reported to the NDIC but, obviously, one cannot report September data until after the end of the month. The company may or may not sell produced oil; if it is sold, it is found in the "runs" column.

Again, "produced oil" is only the oil that has been produced. If it is stored in tanks and not sold, it is only "produced oil." Once the oil is put in the pipeline and sold and "run" to the refinery, and/or put into a truck and "run" to a storage area, then it is referred to as "runs."

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Currently, mostly due to operational constraints posed by pad drilling, 50% - 75% of Bakken wells go to drl status. It appears that about 90% of wells on drl status are completed/fracked/tested/reported within three months of being placed on drl status. I track all Bakken wells, and I post new results daily, and I post that data in a quarterly format. When I go back one quarter (three calendar months) to update the IPs of the previous quarter, it seems 90% of wells on drl status have reported an IP by then.

The number of wells going to drl status is increasing, not decreasing in North Dakota, based on data from the Director's Cut from the past three or four months. I would be surprised if this "improves."