Flashback: November 10, 2009 -- The Bakken, North Dakota, USA

This is very, very interesting: to read what I posted back on November 10, 2009 -- about two years ago. (Note: I did update that original post in a couple of places, and have indicated those updates).

I remember when I wrote "single stage fracturing is a thing of the past," the number of comments I got saying I was crazy. I was very wrong on the number of stages that would become the norm.

There were just 33 rigs in North Dakota in 2008. 33 rigs. Wow.

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The number of active rigs is now up to 87 (January 24, 2010), 20+ more than when I first posted observations about the increase in rigs in North Dakota back in early November. The Grand Forks Herald reports today (January 24, 2010) that there could be 110 - 120 rigs in North Dakota by mid-summer.

My father says that vehicular traffic has increased significantly in  Williston (November 26, 2009).

1. Even the NY Times has noticed that mid-tier companies have been buying up great acreage in the continental US while the majors (like XOM) were ignoring the US, and looking for oil/gas in politically unstable areas overseas. December 15, 2009.

2. Five areas of significant drilling activity: a) Parshall-Sanish north of the reservation, obviously; b) the Van Hook / Big Bend areas inside the reservation, especially Slawson; c) the area immediately around Williston, especially to the west, to include eastern Montana; d) the Highway 50 Corridor: on either side of Highway 50 southeast of Kenmare, and north of Parshall, especially EOG; and e) Ambrose, a ways north of Williston. 

3.  Is EOG asking for 570 more wells in the Parshall? November 25, 2009.

4.  The RS-Feldman well, about 4 miles northwest of Stanley. This appears to be the best Hess well in the Bakken and it may be due to multiple stage fracturing. The presentation by Harold Hamm, November 19, 2009, continues to support my opinion that the increased success in the Bakken is due to multiple fracturing. Some companies are still doing single-stage fracturing -- but I think single-stage fracturing is a thing of the past. Even EOG is studying the "right" number of stages.

5. GeoResources, Inc., announces an aggressive 2010 in North Dakota. GEOI is getting a lot of interesting comments on Yahoo!Finance message boards.

6. Slawson may be the next big story. Look at the results of the the November 3, 2009, North Dakota state land lease auction. In 2007, Slawson had 7 permits in the Williston Basin; in 2008, Slawon had 27 permits; and so far in 2009, Slawson has 25 permits by mid-November. Of the 27 permits granted in 2008, we have yet to hear the outcome of 14 of those permits. The other 13 have resulted in very good wells with IPs ranging from 248 to 2,205 bopd with an average of 791 bopd.

7. There are now 87 active rigs in North Dakota up from a low of "around 33" last autumn, 2008. Many of the big producers say they are still bringing in new rigs for 2009, and certainly for 2010. Harold Hamm, CEO of Continental Resources, says he might have 18 rigs in North Dakota this time next year, a significant increase over the 5 rigs CLR currently has. EOG has stated it could triple the number of rigs they have, from 5 to 15. January 24, 2010.

8. Look at the IPs of the wells reported on November 5, 2009 and the wells that reported on December 14.  Cut the IP in half, and assume that amount will be produced on a daily basis for the first year, and multiply by $70. Then assume that the wells will be productive for seven years (on a declining basis) but subject to re-fracturing. The numbers are staggering. And not all those IPs were exceptional, many well below 1,000 boepd.

9. The companies engaged in fracking are going to be very, very busy: it appears the norm is now 24-stage fracturing, +/- four stages. Some opine that we may soon see 60-stage fracturing. I have to study it again, but it appears the mathematical relationship between fracturing and exposure to oil is exponential. Regardless, it appears that fracturing increases the initial amount of production, delays the need for a pump (albeit a very short period of time), and increases the ultimate total recovery of oil from a well. (My hunch: frac stages remain somewhere between 14 and 20.)

10. EOG typically has 70 - 80 wells on the confidential list. It has been opined that EOG could drill between 225 and 250 wells in 2010. And that's just one producer working in the Williston Basin, albeit the one with the most rigs (six now and going to 13 or 14 in 2010).

11. The area around Williston is very, very active. There are two areas: west of Williston, mostly BEXP. And then northeast of Williston, the Spring Brook area. In the Stony Creek field there are 11 wells/permits on the confidential list. The BEXP well on SE edge of Williston reported an IP of 3,394 bbls/day, which BEXP says is their largest IP reported to date.

12. Harold Hamm, CEO of Continental Resources, opines there may be double the amount of recoverable oil in "the Bakken" forecast by the USGS in 2008. CLR's goal is to double its proved reserves in the Bakken over the next five years.

13. North Dakota is #4 in oil production in the United States, surpassing Louisiana. I never thought that would happen, ever. In December, 2006, Mountrail County produced 1,300 barrels of oil per day; this past October (2009), Mountrail County produced almost 100,000 barrels of oil per day. At $60/barrel, 43 wells in Mountrail County produced $100,000,000 worth of oil at the wellhead over a three month time period, ending in October.

14. Reports that there is yet another formation, the Birdbear, amenable to horizontal drilling are intriguing, but statements saying this is a "new" formation are incorrect. This formation has produced oil, albeit not much, for decades. Incidentally, WLL re-entered an old well that was producing from the Birdbear Formation; exited with a horizontal and ended up with a 2,000 boepd IP in the Bakken (December 8, 2009).