Just a random thought.
On any given day, about four wells come off the confidential list. Of the four, about three are reported to be in DRL status (no IP provided).
DRL status means that the well has been on the confidential list for six months, and must now come off the confidential list. If the well has not been completed (fracked, in the majority of the cases), the operator is allowed to put the well on DRL status and keep it there until 30 days after the well is completed and tested.
Think about that.
The "confidential clock" starts ticking when the well is spud. Operators can now drill to total depth in less than a month. That means, at a minimum, when a well comes off the confidential list and is reported to be on DRL status, it has sat there for five months (and a few days in some cases) waiting to be fracked.
And then, for every 30 days that one does not see an IP reported, that is another month that the well has been sitting there waiting to be fracked.
Five months and another 30 days is six months -- two financial quarters. Half a year. That's a long time for investors (in some cases) to wait.
I personally think that 2012 will see the major players in the fracking business pour additional equipment and crews into the Williston Basin and this problem should become less of a distraction in the completion process. One problem is the number of other major plays, Eagle Ford; Niobrara and Marcelles to name a few, which currently utitilizes a large amount of these companies equipment and crews. Again, my hopes for an additional force in the area of fracking is currently being planned for the future. Now, if we could just control the weather conditions.
ReplyDeleteIf the housing situation is rectified, then fracking crews will be there. I am sure that the companies would have "poured" fracking crews in by now had there been enough housing. Simply not enough housing.
ReplyDeleteSee earlier post about new 2,500 housing units (or whatever it was) for Williston.
It's all about housing.
For some reason, the weather is not an issue for me (I think of wars in Libya, IEDs in Iraq, politics in the Gulf) and weather in North Dakota is a non-issue in the big scheme of things. Canada has a huge energy industry, as does Alaska, and their weather can be just as harsh.
The flooding this year was a 100-year event. And, yes, I am looking through oily-covered glasses. Smile.
Bruce,
ReplyDeleteSometimes they can extend it even further. I give as an example Oasis Petro spudding a well in October 2010, moved to November 2010. After they filed an intent to frack for April 1st, they put the well on the confidential list on April 27th. To this day the well has not show up under the "Confidential Wells Plugged or Producing" list on the daily reports. They're going to be able to go a full year without tipping their hand.
There is not enough equipment. Demand is increasing even faster than new equipment, which is increasing fast. But, more rigs are on order, and some rigs are still available.
ReplyDeleteSome plays need big fracs. Some small. Some don't need any. Acid may be fine for the Monterey Shale, which has produced, and might still produce, more oil than the Bakken.
1,000,000 horsepower @1000/hp is $1,000,000,000.
Lots is on order, but the cost is big, and there is a backlog for components.
The industry is doing lots of long term contracts. Prices are high. If the contract covers the equipment, it works. Otherwise the risk is high.
But, what about sand or ceramics? That is also a big issue. Many unit trains of sand are needed. Special sand. If you can't own an oil well, own the right sand mine.
anon 1
Do you have a file number for that well?
ReplyDeleteTwo issues:
First, I don't know how they can delay and delay reporting, but Oil For America has done the same thing (delayed reporting) with their Lodgepole wells.
(By the way, if they can delay so easily in the manner suggested, it suggests to me that oil companies will hold leases past the expiration date if they show "good faith" in starting to drill. Something tells me that operators are going to find ways to hold onto their acreage even if leases expire before spudding, but I digress.)
Second, if they have indeed drilled and are waiting more than six months to frac, that is not good for the company. If however, they have completed the well and have a loophole to keep from reporting, that's a different story. If they completed the well, and are producing, putting oil in the pipeline, that's fine for the company and the owners of the minerals.
My point was that wells on DRL status that are waiting to be fracked, and these wells are five to six months out, waiting. Huge cash flow issue if companies are sitting on wells they can't complete.
"Anon 1" is so correct. I forget about all the equipment and material needed. One is reminded of all the equipment and the material when one drives around Williston where dozens (hundreds?) of new buildings, businesses, storage lots, warehouses, are going up.
ReplyDeleteOne of the advantages Williston had -- it's funny how things worked out -- was a very well-developed railroad infrastructure. Absolutely necessary to bring all this "stuff" in.
19413
ReplyDelete19413 is a bit of a strange duck. It is back on the "CONFIDENTIAL" list. The well file says it was re-entered on November 28, 2010; took 37 days to reach total depth, January 3, 2011. It was initially a Middle Bakken well; re-designated a Three Forks well while drilling. There is paperwork suggesting fracking was to begin on/about April 1, 2011, but because the well is now on the confidential list, we don't know. However, if it has been fracked, it should be on DRL status, suggesting to me it has still not been fracked.
ReplyDeleteThat would make sense. There is such a backlog that if this well was finished off-schedule, it would now have to wait for a frack team.
I have put this info at stand-alone post and if I remember, will check in on it periodically.
But you correct: it's been a long time, but based on what I see/read, Oasis is having problems with the well, or had problems with the well, and the well is waiting to be fracked.
Because an industry shift has occurred from verticle to horizontel, the crews do not exist in the labor pool. BEXP has dedicated Frac crews, and there is a mean time to productivity for these crews to get the experience needed to do the work at optimum....which BTW due to the newness isnt really yet defined.
ReplyDeleteLabor shortage is about lack of experience on payroll for horizontel versus soda straw....
this will take years to alleviate, as the sheer volume of capital moving to shale extraction will require a constant upgrade in the skill sets of the labor base.
PS....SW MN...has the sand mines, with the right sand matrix of rounded baubels,
they are being developed.....probably a good opportunity for the specialist investors....
You are SOOO correct. Most everyone (including me) forgets it is not just the quantity of the workforce but also the quality.
ReplyDelete