September, 2017, Data Is Posted -- Director's Cut -- Total North Dakota Crude Oil Production Increased 1.6% Month-Over-Month -- Statewide, Breakeven Price = $21

Updates

November 19, 2017: Mark Perry's comments, with graphic.

November 17, 2017: see graphic at this post.

November 17, 2017: Lynn Helms talks about latest productivity --

From The Williston Herald: production cleared 1.1 million bopd and more increases may be ahead.

For the eighth consecutive month, oil production in North Dakota hovered over the 1 million barrel per day mark, and incrementally climbed its way back to another milestone.

September production was 1.107 million barrels per day, up from August’s 1.089 million. It is the first time since March 2016 that North Dakota oil production exceeded 1.1 million.

That,  and the production of natural gas:

These production numbers put state revenues at 17 percent above forecasts, despite prices being a little lower than forecast.

“We are still 2 percent low on that,” Department of MIneral Resources Director Lynn Helms said. “If we project that through the biennium, production numbers will make up for it, but we are still lagging in terms of prices on revenue forecast.”

What's going on in the Bakken?

Longer lateral lines are part of what’s driving increased production, along with more sand and larger, slickwater hydraulic fracturing techniques. 

“One place that’s a standout is what Liberty is doing in northern Mountrail and southern Burke Counties,” Helms said. “I took a look at some of those extended lateral wells that are producing 2.5 to 3 times the initial production rate of the 2-mile laterals that were previously drilled in that area. That’s pretty encouraging, and it’s already affecting Mountrail numbers.”

Burke County numbers aren’t showing an effect yet, since some of the wells production statistics are still confidential.

These improvements are keeping the Bakken in the No. 1 and 2 place in terms of production per rig.

One reason why there is so much activity in the Permian vs the Bakken right now:

“We still have to compete with the fact that there’s a lot of leasehold to procure in the Permian and the Anadarko, but once those basins reach a similar level of maturity, you’d expect companies to bring their capital back here, where they make more money for every dollar invested.”

Long laterals:

• more of them, mostly in non-core areas
• NDIC has re-spaced some 1280-acre units to 1920-acre units to accomodate the need for longer laterals
• only three wells meeting these new parameters are presently producing
• a bump should occur when more of these long-lateral wells come on line
• when looking at month-over-month production increases of almost 20,000 barrels, that represents about one-sixth, one-seventh of that increase; a significant increase
• example: once Slawson is able to complete some of these in Van Hook, it looks like that one pad all by itself could potentially breach 20,000 barrels per day

Flaring problem? a one-time maintenance problem that has been fixed, according to the Director, NDIC.
 

Original Post

Before we get started, from CNBC, September 18, 2017: EIA expects North Dakota's Bakken shale output to rise by 8,000 barrels a day in October.

Director's Cut for September, 2017, data.

Link here.

The usual disclaimer applies. I do "this" quickly and there will be typographical and factual errors. If this is important to you, go to the source.

Summary: the number of producing wells has decreased about 0.7% and yet total production has increased by almost 2% (most likely the number of producing wells will be revised upward when the final count comes in next month). Total North Dakota crude oil production is still over 1 million bopd, increasing by almost 20,000 bopd, nearly three times what the EIA forecast (see above). Flaring has increased (more than expected from number of producing wells and daily production) and now exceeds the state's goal (this may be a headline on environmental blogs). Gas capture on the reservation is very, very troubling. The Native American held-in-trust portion of gas capture is a dismal 65%; private FBIR production reports an astounding 91% capture. The BLM appears to be doing a lousy job working the flaring issue; private wells are doing very, very well in comparison.

According to notes regarding flaring: the percentage of gas flared increased to 17% primarily due to six force majeure events. September 2017 is the first month that industry missed gas capture targets in 3 years of reporting. [Apparently the force majeure events affected the reservation more than the rest of the Bakken.] This is the first time I've seen a note by the Director explaining flaring disappointments to "force majeur" events.

Most interesting was the data on page 12 of the 12-page report. The Director provided "break-even price" by county. Currently, WTI was stated to be $55/bbl:

• Billings: $47*
• Bottineau-Renville: $78
• Bowman-Slope: +$100*
• Burke: +100*
• Divide: +100*
• Dunn: $18
• Golden Valley: $49*
• McKenzie: $18
• McLean: $17
• Mountrail: $17
• Stark: $43
• Williams: $21
• Statewide: $21

*information from previous quarter; too little data to calculate new value.

Note: many, many pages devoted to BLM pending rules and regulations. I may come back to those later.

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The Data

Oil production

• September, 2017: 1,107,104 bopd
• August, 2017: 1,089,318 bopd
• July, 2017: 1,048,099 bopd
• Delta: +17,786 bopd, +1.6%
• compare with previous month -- last month (August, 2017), the delta: 36,591 bbl/day increase; +3.5%

Producing wells:

• September, 2017: 14,089
• August, 2017: 14,190 (preliminary, if it holds, new all-time high)
• July, 2017:13,992
• Delta: pending (previous: an increase of 88 wells; 0.4% increase)
• compare with previous month --- last month (August, 2017), the delta: an increase of 88; 0.4%

Permitting

• October, 2017: 147 
• September, 2017: 104
• August, 2017: 101
• July, 2017: 146 (huge jump)

Oil price (WTI), breakeven price statewide = $21

• today: $48.75
• October: $43.54
• September: $39.56
• August: $37.93
• July: $35.83
• June: $34.72

Rig count:

• today: 55
• October: 56
• September: 56
• August: 56
• July: 58
• June: 55

Wells not producing, total: about 2,300 wells not producing; that exceeds the number of wells completed in any year during the boom

• waiting on completion: 853, down 10 from the end of August to the end of September; (previous -  863; down 26 from the end of July to the end of August)
• estimated inactive well count: 1,444, down 54 from the end of August to the end of September (previous - 1,498; up 20 from the end of July to the end of August)

Takeaway capacity:

• September data: including CBR to coastal refineries is more than adequate
• August data: including CBR to coastal refineries is more than adequate
• July data: including CBR to coastal refineries is more than adequate
• June data: including CBR to coastal refineries is more than adequate
• May data: including CBR to coastal refineries is more than adequate (major change in verbiage)

Natural gas capture, getting "worse" and FBIR is major issue:

• statewide: 83% (previous -- 86% [trending down])
• FBIR: 71% (previous -- 77% [huge disappointment; was 82% previous to that])
• goal: 88% through October 31, 2020; then 91%
• comment: pending (previous - the trend has worsened -- large amount of flaring on BLM land)