Monday, September 22, 2014

Overwhelmed -- And It's Only 8:53 A.M. -- September 22, 2014; How Long Will The Bakken Last? -- Zeits

This post is now complete. I am going to stop blogging for awhile; the system has slowed down too much. 

When I post this much, I don't get around to proofreading it for several days. There will be typographical errors and factual errors. Much is personal opinion. Do not make any financial or investment decisions based on what you read here or what you think you may have read her. I have no formal training in the oil and gas industry. If something seems wrong, it probably is; that's why I post the links.  

I can see it's going to be one of those days. Items for posting are coming in so fast I cannot keep up. I will do the best I can, but it will easily be mid-week before I get caught up. Bear with me.

Let's start with the wells that came off the confidential list over the weekend (by the way, as far as I know, no other site without any advertising and free for anyone, posts results of new wells coming off the confidential list as quickly as this site).  For me, it's like opening a Christmas present every day (that's why weekends are so difficult for me). Whiting looks like they have hit a sweet spot in a relatively quiet area. If this is in the grasslands, this is somewhat ironic. Two or three years ago, in one of their corporate presentations, Whiting said they would not ever, never, drill in the grasslands. It simply took too long to get a permit. Maybe these wells aren't in the grasslands, but ...

Anyway, Whiting reports two huge wells; and, Sinclair reports a nice well. Fourteen wells came off the confidential list over the weekend and today, and all of them were Bakken Pool wells; nine (9) of the fourteen (14) went to DRL status. Over the weekend, I updated the FAQ regarding this phenomenon. In addition, a reader sent me a long note over the weekend that adds some more insight to the phenomenon; when I get caught up I will post that note. It's worth the wait.

The two Whiting wells:
  • 26654, 2,331, Whiting, Thurlow-Williams 11-18-2H, Lonesome, one of the most detailed geology reports I have ever seen in a file; gas units early on averaged 600 to 1,000; near the end 1,200 and then jumped to 2,500 in the last 1,000 feet; if the frack report was there, I missed it; I assume it was similar to #26760 on the same pad; t3/14; cum 47K 7/14;
  • 26760, 2,239, Whiting, Thurlow Williams 11-18H, Lonesome, middle Bakken; 28 stages; 2.5 million lbs sand/ceramic; t3/14; cum 48K 7/14; 
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I can't wait to read this Seeking Alpha article: how long will the Bakken last by Richard Zeits. Don answered that question for me a couple of days ago; I have the post ready and will post it later this week. Until then, enjoy Richard Zeit's article:
Summary:
  • Continental Resources made a bold prediction that recovery factors in the best areas of the Bakken may ultimately exceed 20%.
  • Using a more conservative assumption of ~15% recovery, Continental estimates the Bakken’s recoverable reserves in the 62-96 billion barrels range.
  • Even after applying some risking to these estimates, the Bakken should sustain production at 2-3 million barrels per day for multiple decades.
Continental Resources  unveiled its new recoverable reserves estimate for the Bakken play last week. The company estimates that the Bakken Petroleum System's original oil in place is in the 413 billion barrels (P50 estimate) to 643 billion barrels (P10 estimate) range.
I think Don's estimate is going to be a lot more fun to read when I finally post it.  Hint: Zeits' projection is way off.

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I wrote this post several days ago regarding slide 8 of CLR's most recent corporate presentation but wanted to hold off until later in the week to post it so readers could study the presentation for themselves. Richard Zeits has already posted his analysis so I thought I better get this posted before everything becomes old news.

While I am at it, I will post the other posts I had completed from the CLR presentation and was waiting to post.
Unfortunately it also means I have to close out the poll on recovery rates. I had hoped to wait a bit longer, but the cat is out of the bag.

The poll asked readers what their perception was regarding the recovery rate of OOIP in the Bakken:
  • 1%: 1%
  • 3%: 11%
  • 5%: 34%
  • 8%: 17%
  • 10%: 22%
  • 15%: 6%
  • 20%: 8%
There is no correct answer; there are too many apples and oranges being compared but I'm getting a better understanding of what is meant by recovery rate. We can talk about that in a later post, perhaps. My hunch is there has been some misunderstanding on my part. I'm learning as I go along.
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