Wednesday, May 13, 2015

North Dakota Oil Production Is Up; Data For March, 2015; The Red Queen Is Still Upright On The Treadmill; Number Of Completions Exceed Number Needed For 1.2 Million BOPD Production

North Dakota production is UP slightly more than 1%; the revised number for March, of course, will be higher:
  • March, 2015: 1,190,582 (preliminary)
  • February, 2015: 1,178,082 (revised, final); 1,177,094 (preliminary) 
The increase, apparently, surprised some folks. 
Full summary here.

The Director says 110 - 120 completions/month are needed to keep crude oil production at 1.2 million bopd. The number of completions in February was only 42, but the number of wells completed in March: 189. The number of completions necessary to keep daily production near 1.2 million bopd may need to increase if operators choke back wells significantly after the first month or two. Under optimal conditions, Bakken wells have best production during the first six months and then tend to decline fairly quickly.

An increase of 0.1% production in April, 2015, would put us above 1.2 million bopd. 

A lot of story lines. Remember, the EIA predicted that production in the Bakken was to decrease in June, 2015.
Oil output at the Eagle Ford shale play in South Texas is forecast to see the biggest decline, down 47K bbl/day, while production at the Bakken shale play, centered in North Dakota, is expected to drop by 31K bbl/day, the report says.
So, we'll see. 

The operators are making, for all practical purposes, little headway on completions. I guess the "good news" is that the number of wells waiting completion did not increase, but the number did not decrease all that much either -- dropping from 900 to 880. Insignificant.

But then note this: how many wells did operators have to complete just to stay "even"? A whopping 189 completions in March compared to only 42 in February. And the 189 completions were accomplished even though there were more days in March than in February that the frack spreads could not get into the field due to high winds (8 windy days in March vs 5 windy days in February). It was a lot colder lot in February - so, I guess it was pretty much a wash, though February would have been a worse month to try to accomplish completions. But if they accomplished 189 completions and the total number of wells waiting to be completed dropped insignificantly (from 900 to 880 -- well, smarter folks than I can do the math.

Another story line: you can bet a six-pack that wells are being choked back, making it even more impressive that the daily production increased. One can scroll the "high IP wells" and see just how good the IPs are these days.

Despite increased production of both crude oil and natural gas, flaring did not get worse across the state. The capture rate of 80% across the state exceeds the state's goal and things even better on the reservation: 85% of natural gas is captured on the reservation (I wonder how many wells are being choked back to make this number).

Also, did you note the Director's comment regarding permitting? A little big disingenuous, I suppose: the Director said the rate of permitting is picking up. However, only a few operators account for most of the permitting, and most of the permitting is pad drilling -- four to six permits on one pad. And the operators are circling the wagon: drilling in the best areas in McKenzie County for the most part, and some in Williams and Dunn. Except for the Sanish, I think Mountrail County is pretty quiet.

Seeking Alpha's Summary on Bakken Completions
  • North Dakota recorded a surprising jump in oil and natural gas production in March, as producers successfully wring efficiencies out of existing operations in an attempt to maintain production even at depressed prices.
  • The state's oil producers pumped nearly 1.2M bbl/day in March, up ~15K from February, while natural gas output rose 14% to 47.2M cf, according to the Department of Mineral Resources.
  • The agency says 189 North Dakota wells were completed in March at locations owned by Exxon Mobil, Hess, Continental Resources, and ConocoPhillips, as "these four appear to be more in tune with having normal cash flow, and continue to complete their wells in a more aggressive manner."
  • But in a sign of divergent strategies in the state, EOG Resources and Marathon Oil continue to delay fracking.
  • Other top Bakken producers include WLL, OAS, NOG and EOX

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