Pipeline Capacity

Update on pipeline capacity:

A short article in Oil and Gas Journal points out that due to limited pipeline capacity, CLR is reporting initial production (IP) numbers based on one-day production. According to OGJ, "[t]he company said that its Hendrickson 1-36H well in McKenzie County, ND, set a company operated IP mark of 1,990 boepd on a 7-day test. The well’s best single-day rate was 2,105 boepd. However, the company will report single-day initial production tests for Bakken wells because gas pipeline capacity limits are restricting 7-day rates at some wells, if only in the first few weeks." 

In late 2009, regional analysts opined that with new pipelines and the EOG railhead at Stanley, pipeline capacity would finally accommodate daily production. At the time I stated that if pipeline capacity met requirements, the balance would not last long. The fact that CLR even mentions pipeline capacity issues suggests that we may already be seeing production surpassing infrastructure's capacity to ship oil out of state.  My gut feeling is that it's a local issue: some areas of the Bakken with more imbalance than others.

A few weeks ago I mentioned that companies were starting to go back into Montana. For folks new to the Bakken, it was in 2000 that horizontal drilling opened the Elm Coulee Creek oil field in Montana, and initiated the interest in the Bakken. The Elm Coulee drilling continued through 2006 when the producers moved across the state border and began drilling on the North Dakota side. The OGJ article linked above states that CLR is going back into Montana's Elm Coulee with at least one rig drilling 320-acre spaced wells.  

CLR states that 81% of its 488,500 net acres in North Dakota are undeveloped. For Montana, 60% of CLR's 163,500 net acres are undeveloped.  



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