Monday, November 14, 2016

Bakken Update -- Mike Filloon -- Production Per Well Increasing 27.3% -- November 14, 2016

Link here. Summary:
  • mega-frac style wells continue to show impressive production results, with an increase of 27.3% from 2013 to 2015
  • enhanced well designs are still in its infancy, and should continue to accelerate from a production standpoint
  • from 2014 to 2015, the number of completions decreased by 30% but oil production decreased just 16% and natural gas 1.5%
  • these improvements have been seen in all US plays and we will cover the Eagle Ford in our next submission
  • Trump is bullish the US oil industry and we expect protectionist policies will accelerate oil production growth in all US plays
Note:
Operators are moving rigs to better acreage. Continental is an excellent example. It has a large footprint in North Dakota. Continental was Bakken built, but higher taxes and more costly differentials forced a move to Oklahoma.
North Dakota is also becoming the state known as the state that can't get a pipeline built: Keystone, Sandpiper, and the Dakota Access Pipeline have all been killed. People still hold out hope that the DAPL will be completed.

Other data points from the linked article. In 2013:
Most were moving to a 2-mile lateral using 30 stages and 4 million pounds of proppant. We also saw a move to sliding sleeves, as this helped to keep costs down. When compared to plug and perf, it provides much less access to the source rock.
Could Trump mandate US refiners use only US crude? 
Trump wants to increase the number of high-paying jobs and decrease our reliance on OPEC oil is bullish for all unconventional producers in the US. There is a major issue for OPEC in the coming years. Protectionist legislation could pressure refineries to use US crude.
If this comes to fruition, US production could rise and the WTI/Brent differential could widen significantly. If OPEC crude isn't finding its way to US customers, it may need to cut more than it initially thought.  
************************
Robots Can't Build Crude Oil Pipelines

Yahoo!Finance has this headline story today: Trump's jobs plan faces a bigger challenge than China. Robots may prevent Trump from bringing back the manufacturing jobs he promised.

Maybe.

All I know is that robots aren't building pipelines. And robots aren't replacing roughnecks, at least not yet, as far as I know.

2 comments:

  1. Mr. Oksol

    The output from recent wells in the Appalachian Basin are also showing the same type increase as the Bakken wells that Filloon describes.
    Pretty much due to the same reasons ... better placement of the laterals, keeping in the most productive zones, more stages closely spaced with more perforation clusters per stage, and LOTS of sand.
    Amongst the other follow on effects, the less economic area of these plays will become more viable with the expected higher output.
    In other words, the size of these plays just increased.

    ReplyDelete
    Replies
    1. You are absolutely correct, about the "plays" getting bigger. One will really get a feeling how big these plays could be if the price of oil gets back into the $60's.

      Delete