- North Dakota is on its way to granting 1200 permits for new wells this calendar year
- With 100 active rigs in state, and 10 wells/year/rig, it should be easy to drill 1,000 wells/year]
I am often accused of being inappropriately exuberant about the Bakken. I won't deny it.
But if this doesn't "move you," nothing will.
This was in yesterday's (April 26, 2010) issue of the Minot Daily News.com. The main point of the article has been articulated before, most recently in a basic analysis of the Bakken, but the article in the Minot Daily News breaks down how the numbers were arrived at.
Lead paragraph:
"The head of the state department that oversees mineral resources in North Dakota says it will take 10,000 to 20,000 wells to fully develop the Bakken-Three Forks Formations."Note: this estimate does not include the Spearfish (currently being developed by EOG) or the other formations in the Williston Basin: Red River, Madison, Lodgepole, and others.
But I digress.
Here is how Lynn Helms breaks down the 20,000 wells to develop the Bakken-TFS formations. I rounded some of the numbers for easier reading.
Ray-Tioga area:
- 430 to 540 wells per year for 11 to 14 years (5000 wells)
- 4 million gallons of water/day May through December
- 70 to 90 wells per year for eight to 20 years (2000 wells)
- 1 million gallons of water/day May through December
- 120 to 150 wells per year for 12 to 15 years (2000 wells)
- 2 million gallons of water/day May through December
- 250 to 310 wells per year for five to seven years (1500 wells)
- 2 million gallons of water/day May through December
- 235 to 290 wells per year for six to eight years (2000 wells)
- 1 million gallons of water/day May through December
- 375 to 450 wells per year for seven to eight years (3000 wells)
- 2 million gallons of water/day May through December
But that is just half the story. Lynn Helms said that other areas would also develop oil and these areas would also require about 20,000 to be fully developed. These areas include: Ward (Minot), Bottineau (Spearfish formation), Burke, Renville, McLean, Bowman, Slope and Stark.
The original timeline remains pretty much on schedule though it has been pushed out one to two years; according to Minot Daily News, Helms said that momentum was lost during the five-month price drop.
(Incidentally: "....momentum was lost during the five-month price drop." That tends to validate those who have noticed a paucity of new wells being reported this month. Are producers waiting for price of oil to trend upwards?)
Why was the original IP of a well 2264, then 2 months later it is reported as 1339? What does this mean? Also, what mechanism is in place to ensure that the oil companies are honest about how much oil is really coming out of a well when calculating royalty checks.
ReplyDeleteI've discussed the nuances of reporting IPs on several pages of this blog. The best answer is on my FAQs page (link at top of page). Having said that, drillers/operators have various methods of reporting IPs. Some report an average over seven (7) days; some over thirty (30) days. The decline rate is significant in the Bakken and thus a 7-day average will be significantly different than a 30-day average. In addition (and I am very guilty of this myself), sometimes the IP you are looking at is the boepd ("oil equivalent" = oil + natural gas) which would be more than bopd ("oil" = oil only).
ReplyDeleteWhen one sees a huge differential in "IPs" for a specific well such as you've pointed out, it is most likely that the higher number was a 24-hour flowback (technically not an IP), and used predominantly as public relations, marketing, press release, etc.
Without knowing the details, I assume the higher number (2,264) was the 24-hour flowback, and the 1,339 was the 7-day average. Had it been a 30-day average it would have been even lower. But it's possible it was a 30-day average, making for a very good well.
With regard to your second question, the regulatory agencies, auditors, middle-men, pipeline companies, and truckers all leave an audit trail for fraud investigators to follow.
I wouldn't worry about your second question; your first question is one that many folks wonder about. I report the "IP" only because that's about all there is to report early on. The one-year and five-year cumulative production are the important numbers.