When you go to this link, scroll down a little more than halfway, looking for a post by "Allen" if you are interested in learning a bit about the history of surveying the midwest back in the 1800's and an explanation for some of the anomalies in the results.
Pure trivia.
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Tuesday, April 27, 2010
20,000 wells in the Bakken?
[While reading the following post, keep a couple points in mind:
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:
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:
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?)
- 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?)
Halliburton Crews (Fracking) Go To 24 Hours Operations in the Bakken
Halliburton has announced that its fracking crews will now work around the clock (24/7) in the Bakken. Demand has simply outpaced supply.
From other sources, it is my understanding that there can be a six-month wait to get a fracking crew on site to complete a well.
From other sources, it is my understanding that there can be a six-month wait to get a fracking crew on site to complete a well.
Bismarck (ND) Oil Conference: Largest North of Houston
From the office of the Williston (ND) Economic Development:
"North Dakota's oil industry is getting more and more popular all of the time....oil producers are shifting their focus to shale formations -- like the Bakken. That change is bringing even more growth to North Dakota. More than 2,000 have registered for the Williston Basin Petroleum Conference and Expo in Bismarck next week -- making the oil show the largest one north of Houston."Of course, between Bismarck and Houston, except for Tulsa, there isn't much with regard to oil. Smile.
Newfield Reports Four New Wells; Two in Sand Creek
This might be old news to some folks, but Newfield Exploration recently issued a press release announcing the completion of four wells:
Again, with the new ways of determining IPs, it is becoming more and more difficult to know exactly how good these wells are. We will only really know when we get the yearly results.
But can we learn anything from Sand Creek?
Background:
I started to write what I thought we could learn from this, but I felt I was beginning to ramble, and so after quite a bit of writing, just deleted it all.
But this is what is is: the Sand Creek (1,137) well is only one mile due north of the Alice Federal (617); and, the Pittsburg (1,200) is only three miles north of the Sand Creek. The first full month of production for the Alice Federal was August, 2009. I assume the two new Sand Creek wells were completed within the last month or so.
Meanwhile, on another note, Newfield, in a press release, states that it expects its Williston Basin production to increase by 40% in 2010.
18267, Clear Creek State 1-36, 3,932 IP; with a 502 boe 30-day averageThe Pittsburg and Sand Creek Federal are in the Sand Creek oil field; the Arkadios is in the Haystack Butte oil field; and, the Clear Creek State oil well is in the Westberg oil field, which is south of, and shares a border, with Sand Creek.
18122, Arkadios 1-18H, 1,686 IP; with a 457 boe day average
18284, Pittsburg 1-3H, 4,143 IP; with a 1,200 boe day average
18323, Sand Creek Federal 1-21H, 2,568 IP, with a 1,137 boe 30 day average
Again, with the new ways of determining IPs, it is becoming more and more difficult to know exactly how good these wells are. We will only really know when we get the yearly results.
But can we learn anything from Sand Creek?
Background:
Back in March, 2010, some folks were noting the horrendous decline rate of the Alice Federal 1-28H well (17758), also in Sand Creek. The decline rate issue is nothing new for Bakken wells. Its IP was 617, not bad by historical standards but not exciting by what we've seen in this boom in the Parshall. Worse, by the sixth month, this well was down to 80 barrels/day.So, what can we learn from Sand Creek now that we've seen two wells come in with IPs of 1,000 to 4,000 boepd (depending on how one calculates IPs) compared to a well that is now producing only 80 bbls/day with an initial IP of 600?
I started to write what I thought we could learn from this, but I felt I was beginning to ramble, and so after quite a bit of writing, just deleted it all.
But this is what is is: the Sand Creek (1,137) well is only one mile due north of the Alice Federal (617); and, the Pittsburg (1,200) is only three miles north of the Sand Creek. The first full month of production for the Alice Federal was August, 2009. I assume the two new Sand Creek wells were completed within the last month or so.
Meanwhile, on another note, Newfield, in a press release, states that it expects its Williston Basin production to increase by 40% in 2010.
KOG Areas of Interest -- Update April 27, 2010
Kodiak Oil and Gas, Inc., has four areas of interest in the Bakken.
According to their current presentation (I don't know if these links break/change over time; this is the April, 2010, presentation), these are the four areas in the Bakken where Kodiak has leases. Three of the four areas are in North Dakota; the fourth is in Montana, just across the border from ND.
FBIR Bakken / Three Forks / Dunn County, North Dakota
Red River - Mission Canyon Play / Other Williston Basin / Montana
According to their current presentation (I don't know if these links break/change over time; this is the April, 2010, presentation), these are the four areas in the Bakken where Kodiak has leases. Three of the four areas are in North Dakota; the fourth is in Montana, just across the border from ND.
FBIR Bakken / Three Forks / Dunn County, North Dakota
55,000 / 35,000 (gross / net) acresKoala (North Dakota)
Bakken producers
Additional producers: TFS
Entirely within the Fort Berthold Indian Reservation (FBIR)
This area is located in the southwest corner of the FBIR
Gross acreage represents almost 10 percent of the reservation (personal estimated observation)
This appears to be KOG's most active area at the present time
Within this area of operations, KOG identifies six "prospects"
Two Shields Butte: partner XTO (50/50)
Saddle Butte: partner XTO (50/50)
Skunk Creek: partner private company (60/40)
Moccasin Creek: partner private company (60/40)
Charging Eagle: no partners identified
Tall Bear: no partners identified
5,680 / 4,531 (gross/net) acres
Bakken/TFS -- west of Nesson
This is the four-corner area of townships: 152-100, 152-99, 151-100, and 151-99
This is located just south of the river, northeast of Alexander
If I read the various maps correctly, County Road 29 runs right through KOG's immediately south of the river
Acquired in April, 2010: represents about 8 sections total
KOG: "heart of McKenzie County play"
Will ask NDIC for six (6) 1280-acre spacing units
Request two to three well bores per 1280-acre spacing unit
Total: 12 - 18 gross Bakken locations
Red River - Mission Canyon Play / Other Williston Basin / Montana
22,600 net acres
Bakken / TFS potential
Red River / Mission Canyon
In Sheridan County (Montana) and Divide County (North Dakota) -- north of Williams County (Williston)
KOG's acreage appears to be entirely inside Montana, just west of the ND border
I don't follow activity in Montana (I don't have time) but KOG recently took delivery of its second rig. KOG now has one rig in ND and one rig in Montana. The rig in Montana is currently drilling a vertical well into the Red River formation.Grizzly (Elm Coulee Bakken Trend) / North Dakota
3,907 / 3,419 (gross/net) acres
Existing Bakken producers
Additional Bakken / TFS
KOG's acres within Elm Coulee is on the North Dakota side of the border, McKenzie County, between Sidney, MT, and Alexander, ND
Acquisition in April 2010 increased working interest to 87.5% on 3,900 gross acres
Two existing producing wells
16162, Kodiak Grizzly 13-6H, 6-147-104Two new wells planned for Q210
16300, Grizzly Federal 1-27H, 27-148-105
xxxxx, Grizzly Federal 13-6H, 6-147-104 (no permit yet)
18923, Grizzly Federal 1-27H-R
Fort Berthold Indian Reservation Update -- April 27, 2010
NEWS
August 2, 2010: Connecting the dots -- the Arrow Pipeline. MHA, SHD, XOM, XTO, KOG, QEP.
April 28, 2010: #18968/#18969, Petro-Hunt, Fort Berthold 148-95-22D-15-1H/Fort Berthold 148-95-27A-34-1H/ new permits, NDIC. Two wells on same pad. Both wildcats. Interesting.
April 28, 2010: KOG, Moccasin Creek 16-3-11H, #18295, reports 1,260 bopd, NDIC.
ORIGINAL COMMENTARY
It is ironic that the location where "the Bakken" was discovered has been lagging in activity. Until now. See Minot Daily News.
The first "real" horizontal Bakken well was drilled in 2006. The well was inside the reservation and yet it is only now, 2010 and 2011, when the oil activity inside the reservation will finally catch up with activity in the rest of the Bakken outside the reservation.
For the past few months now I have been posting this little nugget: 2010 should be a watershed year for Fort Berthold Indian Reservation.
It is my impression that FBIR is two years behind the rest of the Bakken, particularly the prolific Sanish ("owned" by Whiting) and Parshall ("owned" by EOG) oil fields, because of (artificial) bureaucratic obstacles in Washington, DC. North Dakota Senator Dorgan is credited with removing those obstacles and it appears the federal regulatory process for granting permits in the reservation now has a similar timeline to that of the state.
It is my impression, based on permits granted, and the number of rigs in the reservation, that 2010 - 2011 will be the time period in which the reservation catches up with the rest of the Bakken.
With that as background, I was thrilled today to see the very lengthy article in Minot's local paper about the activity on-going in the reservation. It is absolutely incredible. [Update. September 21, 2010: as predicted, this link is now broken. I find it amazing how local newspapers don't archive these articles. Fortunately I posted the main points from the article below.]
You may want to cut and paste pertinent information from this article. Some of these articles are archived after a few weeks and they become hard to find. Some sites only allow access to archives through a subscription, albeit, some are free.
Unless I missed it, the article did not mention the refinery that is still on track for the reservation.
From the article
Activity:
- Producing wells inside the reservation: 41 (seems low, actually; thus, huge potential)
- Active rigs inside the reservation: 20
- Oil companies working inside the reservation: 16. Instead of listing all those inside the reservation, it is easier to note the notable exception: Whiting. Others I don't see: NOG, AEZ, Fidelity. Of course, EOG is there; EOG is everywhere. Companies I associate with the reservation: KOG and its partners, Slawson and XTO.
- Tribal land: land inside the reservation owned by the Three Affiliated Tribes
- Allotted land: land inside the reservation owned by individual Indians
- Fee land: land NOT held in trust by US government
- Trust land: land held in trust by US government; can be tribal or allotted
- Applications for new permits: 175 pending (as of date of interview for story)
- Applications approved for new permits: 92 (as of date of interview for story)
- Compare: in 2008, there were 14 permits (versus 92) approved -- obstacles? Yes.
- For perspective: "we" are on track for 1200 permits to be issued in North Dakota this year (2010); that averages about 3 new permits/day; the most permits granted in one year in current boom was about 950 in 2008; there were about 630 permits granted in 2009
- Acres leased in the reservation: 502,862 (total FBIR acreage: slightly less than 1 million)
- Most of the tribes' mineral rights are under water (the lake is controlled by US Army Corps of Engineers) -- somehow that doesn't surprise me -- very, very sad
- Comment: most folks who opine on this issue say that the Corps has been responsive and helpful
- Bureaucratic process: the process to drill a well on federal land in the Bakken is a 49-step process
- The Minerals Registration Act of 1984 returned the minerals under Lake Sakakawea to the Three Affiliated Tribes -- I wonder who made up the ND congressional delegation to right this wrong?
- There are wells being drilled under the lake; south of Parshall and in the Mandaree areas; I assume "they" should have more than enough water for fracking
- First "real" Bakken well: Parshall 1-36, April, 2006, was the first real successful well that utilized horizontal drilling in the Bakken
- Taxes and wealth distribution
- Federal mandates: encourage self sufficiency of the reservations but maintain their national park-like image
Western Union
I have added a new page called "Western Union" which you can find at the top of my blog. It is an attempt to link those folks who consistently post good information about the Bakken.
Active Rigs -- As of April 27, 2010
This is a summary of the active rigs at the NDIC's active drilling rig list, April 27, 2010. This may or may not add up to 111. I could have missed a couple one way or the other, but I believe it's pretty close.
My only comment: some may be disappointed with one company who has only one active rig in North Dakota, and yet its parent has been headquartered in North Dakota for decades. Some may ask, "how did they miss this?" The answer: like some others, perhaps their business plan is to minimize risk by acquiring acreage and partnering, but not actually drilling. Buy why any rigs at all, then?
When EOG's 13th rig is active again, the current number of 111 will move to 112, and once load restrictions on North Dakota highways is lifted, the number should increase. Some analysts have said there could be 150 wells by the end of the year (2010); most have said 125. I'm beginning to wonder if fracking crews are the bottleneck and not the number of rigs.
Rigs are needed for two purposes: a) current cash flow; and, b) to hold leases that are about to expire. If one cannot complete a well because fracking crews are not available, it does not make much sense to bring in another rig, unless there is a backlog of leases about to expire.
There is one other unknown: the number of new drillers coming in.
If my reasoning is correct, the list below should remain constant for the rest of the year with the exception that we might be see a few new drillers bring in rigs.
My only comment: some may be disappointed with one company who has only one active rig in North Dakota, and yet its parent has been headquartered in North Dakota for decades. Some may ask, "how did they miss this?" The answer: like some others, perhaps their business plan is to minimize risk by acquiring acreage and partnering, but not actually drilling. Buy why any rigs at all, then?
When EOG's 13th rig is active again, the current number of 111 will move to 112, and once load restrictions on North Dakota highways is lifted, the number should increase. Some analysts have said there could be 150 wells by the end of the year (2010); most have said 125. I'm beginning to wonder if fracking crews are the bottleneck and not the number of rigs.
Rigs are needed for two purposes: a) current cash flow; and, b) to hold leases that are about to expire. If one cannot complete a well because fracking crews are not available, it does not make much sense to bring in another rig, unless there is a backlog of leases about to expire.
There is one other unknown: the number of new drillers coming in.
If my reasoning is correct, the list below should remain constant for the rest of the year with the exception that we might be see a few new drillers bring in rigs.
WLL: 11EOG: 12 (earlier this month, EOG had 13)CLR: 12BEXP: 5Slawson: 5BR: 3Marathon: 4Hess: 6Newfield: 3St Mary Land: 2Petro-Hunt: 4Encore: 2XTO: 5Anschutz: 4Cirque: 1Zenergy: 4Tracker: 3Zavanna: 1Kodiak: 1 in ND; 1 in MTOasis: 3
Murex: 3
Others: Questar (1), Sagebrush (1), Hunt (2), Ritchie (0), American (1), Eagle (1), Baytex (1), Samson (0), Simray (1), Jayhawk (0), PDC (1), Cornerstone (1), Peak (1), Fidelity (1), North Plains (1), BTA (2)