CarpeDiem: What Each Well Means To North Dakota -- Staggering

Link here to Carpe Diem.com.

Again, the comments are most interesting to read.

Bottom line: the great wells pay for themselves in 6 months; the good wells in 18 months; the average well in 3 to 5 years; there are no "dry" wells; and the Bakken wells will produce for 29 years. There may be some hyperbole in all that but not much. The oil companies are investing on the order of $3 billion/month -- repeat, $3 billion/month -- in just a few counties in western North Dakota. And this is despite a depression in some parts of the country, a recession in many parts of the country, and an economic downtown in all but a few counties in the country.

Estimated ultimate recovery (EUR) has been revised upward over the past 18 months, from 400,000 bbls in the "better" Bakken to 900,000. I expect to see EURs of 1,000,000 bbls. Initial production rates of 500 to 1,000 bbls/day got the interest of folks in the Bakken. Now, even wells with IPs of 1,000 to 2,000 are not talked about except by the mineral owners. And I haven't seen a headline in "I don't know how long" regarding a "gusher." The only comment that comes remotely close is the current question of whether the IP reported for a CLR well last week of 4,991, was an error. It probably was.

Estimates of original oil in place also continue to be revised upward.

Total production of four or five counties in North Dakota now exceeds that of California and Alaska. North Dakota oil production is #2 in the nation, behind Texas, and North Dakota production is choked back due to several factors.

The railroad industry is being transformed -- that probably would have happened anyway, but the killing of the Keystone XL offered new opportunities. Funny how things work out. 

North Dakota is blessed with most land in private hands, but we will get the chance to see what federal fracking regulations do to drilling on the reservation next year. Based on the history of Montana, the writing is on the wall.

But I digress.

When one reads some of the comments at CarpeDiem on this story, one gets the feeling that some folks don't understand that every month, 200 new wells are being drilled, each costing about $6- to $14 million. All with private money; no federal money. Each of those wells -- each of those wells -- can be thought of as equivalent to a new $10 million business sprouting up in your neighborhood. Two hundred new $10 million businesses sprouting up each month. I think I read somewhere it takes about 75 other oil service companies that keep a well running, including the tax accountants, the landmen, and, of course, it provides a lot of work for federal and state regulators and bureaucrats. And the cost of each well should be paid back within five or six years at worse, and unless the world quits using oil, they will keep pumping oil for 30 years.

Oh, one more thing. Each well right now is pretty much targeting one payzone: the middle Bakken or the Three Forks.