July, 2010, update on wells coming off confidential list
Note: 53 wells come off the confidential list in January, 2010.
Note: 55 wells come off the confidential list in February, 2010.
Note: 65 wells come off the confidential list in March, 2010.
Note: 42 wells come off the confidential list in April, 2010.
Note: 49 wells come off the confidential list in May, 2010.
Note: 50 wells come off the list in June, 2010.
It has been opined that the increase in wells coming off the confidential list early in 2010 was due to number of EOG wells that would have been reported earlier, but were delayed due to delay in fracking.Note: 54 wells come off the confidential list in July, 2010.
I'm surprised we're not yet seeing a jump in number of wells coming off confidential list. In October, 2009, there were only 56 active rigs; in January, 2010, the number of rigs approached 90 rigs, and yet, the number of wells coming off confidential list in January, 2010, was 54, and the number of wells coming off confidential list in July, 2010, is 49.Note: 73 wells come off the confidential list in August, 2010.
Note: 68 wells come off the confidential list in September, 2010.
Note: Jumping ahead -- 103 wells come off the confidential list in December, 2010.
The jump in the number of wells in December is probably due to two reasons:
- Increased activity from record number of active rigs
- Companies like EOG don't frack during the winter
*****
I am an eternal optimist so take the following with the proverbial grain of salt. I'm getting the feeling that 2010 could be a watershed year for the oil industry in North Dakota, the perfect storm one might say, but in this case, a very, very good storm, for these reasons:
a. Oil prices seem to be trending higher, but in an orderly fashion. Meanwhile, analysts predict demand for oil will outpace supply in 2010. More recent update from EIA, January 14, 2010.
b. The oil companies will continue to define the geology and the extent of the basin. Particularly noteworthy is the "far east field" -- the Clear Water field bordering Ward County -- which EOG is aggressively pursuing. As of early January, 2010, EOG has 50 of 54 wells/permits in this field of 101 sections (the prolific Parshall field has 162 sections). [Note: both fields could be expanded over time. The Parshall field could be extended north and east. EOG is not the only producer interested in the Clear Water field; Hess was granted two permits in the Clear Water on December 16, 2009.
c. North Dakota had a record-breaking land lease auction, November, 2009. Producers and developers did not lease this land to watch the prairie grass grow. Record setting lease prices (up to $8,000/acre) for the February, 2010 land lease auction.
d. All major producers in the Bakken have announced a) an increase in their capital expenditure program; and, b) an increase in the number of rigs they will be operating.
e. Although a lot of consolidation that resulted from slump in oil prices in 2008 seems to be ending, there are still significant deals being made. The relationship between NOG (publicly traded) seems to be growing with Slawson (not publicly traded). XOM buys XTO. Denbury buys Encore.
f. Several major producers or exploration companies have recently concluded new share offerings: KOG, BEXP, NOG, raising cash for their 2009-2010 program. These companies are not raising cash just to invest in money market funds.
g. Current data suggests 20+ stage fracturing will become the norm in the Bakken.
h. It appears that more companies are drilling 1280-acre spacing wells. Even EOG, historically drilling short laterals, now has applications in for long lateral wells. Compare head-to-head results, 640- vs 1280-acre spacing.
i. Time to complete a well has decreased significantly, which will result in at least two things: a) more wells being drilled in a calendar year; and b) less cost to drill. Some producers are drilling wells in 16 days; however, time to completion not that much shorter due to long time to complete fracture stimulation.
j. The US has adjusted to an unemployment rate of 10%. The strength of the dollar has increased, and oil continues to rise in price (January, 2010).
k. Could the choke point for increasing oil production and getting oil out of the state be the pipelines? Although still lagging, the pipeline capacity to get the oil out of North Dakota has increased remarkably, and EOG's rail head to ship oil out by tanker went operational December 31,2009, about two months ahead of schedule. [Nice overview posted here, dated November 16, 2009.]
l. If an eco-pad with four wells on it actually works out, it's going to be quite a story. Can you imagine initial production (IP) numbers based on an Eco-Pad with four (4) laterals versus a single well with a single lateral?
*****
I think the biggest trend in "the Bakken" right now is multi-stage fracturing (remember, this was originally posted November 5, 2009). Examples abound but the history of Hess may be as good as any and better than most. It's hard to believe that only a year ago there was not a lot of talk about the number of stages of fracturing. All of a sudden, it seems, the number of stages of fracturing has become a hot topic of discussion. A few months ago, Halliburton announced a huge ($20 million) expansion in its complex east of Williston. And shortly after that, BEXP announced that 20-stage fracturing will become the standard. Discussion groups continue to bemoan the shortage of frac crews.
This site says we will soon see 32-stage fracturing, and it will not be long before operators/drillers could see 60-stage fracturing.
It also appears that producers are studying the best time to actually accomplish the fracturing. The timing may depend more on the finances/availability of frack crews/price of oil rather than simply fracturing immediately after the well has reached total depth. There were suggestions/rumors on message boards that EOG was studying the timing of fracturing. EOG has stated it is researching the optimum number of fracturing stages.
There may be a good example of this trend line. The Charlson 44-33H came off the confidential list today. Its IP was under 300 bopd, and yet two months later, its average daily production is over 500 bopd. So, the questions: when did they do the frac; and how many stages?
The Bakken Blog posts a wonderful review of multi-stage fracturing. Posted November 6, 2009.
*****
This may or may not be important in the future as a trend (cost and time to drill a horizontal Bakken well), but I don't want to lose the link. If you scroll to the top of that link, Slawson reports that it has put in a horizontal well in 16 days and for less than $3 million. The rule of thumb for a horizontal well in North Dakota: 30 days (it used to be 45 days) and $4 - 6 million. [Note: since this was posted a long time ago, NOG and Slawson have strengthened their relationship.]*****
The trend in prices paid for oil leases from the state of North Dakota can be found by clicking here. North Dakota state holds an auction every three months. The November 3, 2009, auction hit a record ($71 million vs $30 million in 1980).
Original post: November 5, 2009. Some of this page was updated: July 20, 2010.
Thank you for stopping by. Any topic that might result in controversy or questions, I try to remember to include the link to the source -- that's how I try to build trust with my audience.
ReplyDeleteThe biggest challenge of any blogger is to organize information in an easily retrievable way, and I'm still struggling with that.
Bruce,
ReplyDeleteWhat is the meaning of the confidential list?
embraceyourinnerhillbilly
The "confidential list" is a list of oil wells which you can access at the NDIC home page or from my webpage, right sidebar under "North Dakota Oil." Here is the URL if you want to "cut and paste it" and bookmark it for future reference: https://www.dmr.nd.gov/oilgas/confidential.asp.
ReplyDeleteIn North Dakota (and I assume in all states), producers (oil companies) are allowed to keep information "confidential" for a period of time after they drill their well. In North Dakota, producers are allowed to keep certain information confidential for six (6) months. For more information on confidentiality, click on my FAQ (again, the right sidebar, and it's question #14).
Producers would like to keep the information confidential as long as possible because if they hit a "good" well, the land around it will immediately increase in value, making it more expensive to lease the land. There are other reasons also, I suppose.
Let me know if this answers your question.
The "confidential" list on the NDIC website has about 700 wells on it currently (it's been steady for several months). The last column tells you when the well comes off the confidential list, but producers (oil companies) sometimes release the information more quickly for various reasons.
ReplyDeleteThis list obviously changes from day to day, but not very much. For the casual observer, I don't think the confidential list is all that important, but it gives you an idea of how many wells are actually being drilled, or recently drilled.
Thanks Bruce, that answered my question.
ReplyDeleteI have noticed the renewed interest in the Sergeant Major 1-21H oil well located in Mckenzie County. Seems that they have returned to frac again? Hmmmm!
ReplyDeleteThank you for stopping by.
ReplyDeleteFor some reason the Sergeant Major sticks in my mind, as if I've read something recent about it, but I can't find anything relevant right now. I do know the Bakken Shale Discussion Board mentioned it a couple times when the IP came in so low, suggesting there were problems with the drilling. I was surprised as most when the IP was 30.
There is very little activity in this immediate area, but of interest there are two Whiting wells in the section just south of the Sergeant Major: #17188, and #17238, both confidential. I can't believe Whiting would put into two wells if the area was as bad as Newfield's Sergeant Major would suggest. Of note, Whiting has yet a third well in that area, #17236, 1.5 miles to the southesat.
It certainly looks like Newfield sees the same thing we do (three Whiting wells next door) and may be looking at going back in.
I've added these three Whiting wells to my "wells to watch" list alongside the Sergeant Major.
Curious, indeed.