Updates
July 26, 2012: some data points that were not mentioned below in the original post, or the first update, from the Dickinson Press --
- the cited Bentek Energy study was commissioned by the NDIC
- in the past, the 30-second sound bite: $3 - $4 billion to develop the Bakken natural gas program; now, that number has been raised to as much as $15 billion (huge new data point)
- the study looked at only the Bakken and Three Forks wells in North Dakota and eastern Montana
- currently: the area studied -- 736 million cubic feet/day; projection -- 3.1 billion cubic feet/day (so, for round numbers, from 3/4 billion to 3 billion)
- unlike oil, natural gas can only be transported by pipeline
- huge potential for value-added industries: fertilizer, petrochemical and natural gas-fired electrical generation
- reminder: natural gas liquids higher economic value than dry natural gas now, but now as valuable as oil
Justin Kringstad, director of the pipeline authority, said the study — the first to assess the long-range potential for natural gas in the state — shows that gas will represent an increasingly larger share of the output of wells, which are being drilled primarily for oil.I would be curious to see if others agree: that as the Bakken wells age, the ratio of natural gas to oil will increase.
“It shows that the ratio of natural gas to oil will continue to increase as the wells age,” he said.
The writer makes a point (and there is a photograph to send the point home in case anyone missed it) that natural gas is being flared (see below) in the Williston Basin. Yes, natural gas is being flared, but the issue is a McGuffin. See below. The data point that should be followed is not how much natural gas is being flared but how long it takes to get an average well hooked up to a natural gas pipeline as the Bakken boom matures.
Obviously if only one well was drilled/month across the entire state of North Dakota, not much natural gas would be flared. But with 200 new wells/month, yes, a "lot" of natural gas will be flared. It's my impression, and I could be wrong, that the companies are getting their wells on pipelines more quickly that two years ago.
I do have to chuckle. Investors are looking at a new natural gas boom in North Dakota; faux environmentalists are looking at a McGuffin.
A huge "thank you" to the reader for sending the StarTribune link: if that is accurate -- that a natural gas boom is pending in North Dakota -- that's huge.
Original Post
Bentek Energy, LLC, website.
For newbies, the Bakken is currently producing about 640,000 barrels of oil per day plus natural gas. It is an oil field, and natural gas is, for the most part, a by-product of producing oil. Folks consider the Bakken an unconventional oil field, not a natural gas field.
On slide 13 of the NDIC presentation dated May 25, 2012, the NDIC provides three data points: proven, probable, and possible. In 2025:
- proven: 600,000 bopd
- probable: 800,000 bopd
- possible: 1,100,000 bopd
The writer provides a throw-away link in the linked article above regarding "wasting" natural gas. As I've noted many, many times, the flaring of natural gas in the Bakken is not unanticipated, and reporting it as an issue to be resolved is a McGuffin. The regulators are doing the right thing by saying they are working on it, but in fact, the free market system / oil and gas industry will resolve this non-issue.
That estimate should open the eyes of many outside investors in housing and retail. Many people, especially locally, think the Bakken will fade out later in the decade. With that type production estimate, Williston at 100,000 people may be way low.
ReplyDeleteI think many people forget -- I certainly do -- that the EURs forecast are for primary production only. Then, one has secondary and tertiary production.
DeleteI also think folks forget that these wells, though the decline is horrendous, will produce for 30 years. For the next decade, they will be putting in infrastructure.
Here's a more developed story in the Mnpls Star-Tribune
ReplyDeletehttp://www.startribune.com/business/163769716.html?refer=y
Have invested in ONEOK Partners, and with those nat gas numbers, ONEOK's Bakken facilities look to be running for a long long time.
Thank you for taking time to write/link that story. Yes, I have been very, very impressed with ONEOK and I've blogged that several times.
DeleteIt's a very involved story why I consider the issue of flaring a McGuffin, but that is not to say that I don't feel natural gas will be a major industry in North Dakota before this is all over.
I think the Bakken natural gas story was a surprise to all of us -- and I got such a kick out of the fact that ONEOK figured that out. Again, I am very impressed with ONEOK, and yes, I agree, their facilities will be around a long, long time.
Oil comes out easily with high pressure gas. The pressure goes down with production. Oil may decline more than gas since it is harder to get out. But, it depends on the formation. Range Resources today confirmed that their SWPA wet gas wells will become less liquid over time.
ReplyDeleteIt is not more gas, it is more gassy, as the gas declines more slowly.
anon 1
Yes, I almost missed that: it's the ratio of oil / natural gas changing over time that the researcher was talking about. Not absolute natural gas.
DeleteIt's also something I did not know -- that natural gas declines more slowly than oil over time. That puts flaring into even more perspective for me. Yes, we need to get those pipelines hooked up, but 30 days of flaring one way or the other is not going to make a bit of difference over 30 years of production.
I heard that a college student going to Bismarck found housing very difficult. Actually, hasn't found housing. It might be a good time for students to avoid the western ND colleges.
ReplyDeleteanon 1
The newspapers have talked about housing problems for Dickinson State (if the name hasn't changed) and Williston University but what an opportunity at so many levels: universities need to offer courses on-line; courses need to be relevant; some high school students might want to get two to four years of real world experience in the oil fields, and then go to college.
DeleteBruce,
ReplyDeleteThe producers are behind on natural gas infastructure. They have been catching up and I would expect them to continue to do so in a flat rig count environment.
~JJ
It would be tough for me to find it on my site, but I believe when the Bakken boom started, "they" estimated that the economic value of natural gas in the Bakken represented about 3 - 5 percent of the total hydrocarbon value. It was only after some time that a smart ONEOK analyst realized how much that really represented as the estimates of the Bakken continued to increase every six months.
DeleteBut yes, if there was only one rig drilling in the Bakken, there would be almost no problem with flaring, but with 200 rigs drilling a well/month ...
Dickinson State has just built new affordable housing for their students that will open this fall. 3 bedroom apartments at a very affordable price. Round-the-clock cafteteria, security, all off-campus. Housing should not be an issue. There will also be oil-related degrees available soon from several western colleges - stand by for news.................. ;)
ReplyDeleteThank you for the update. That really is impressive in this housing environment.
Delete