Updates
September 1, 2012: time is up. Essays should have been handed in by now. The answer is posted here.
Original Post
Some random data points, and then a one-question quiz.
- Lately it has been reported that the wells in the Bakken are getting very expensive to drill/complete. Some have even said the high costs of a Bakken well are "ruining" the Bakken.
- It used to take, on average 45 to 60 days to drill a well to total depth. Now, Lynn Helms says operators are getting to total depth in 20 days. I posted one well today that got to total depth in 13 days.
- It is also generally agreed that fracking takes much less time now than it used to. (That data is a bit harder to come by.)
- I can't say for sure, but it appears that the IPs are consistently better than a year ago.
This question is for newbies only. I am looking for two specific reasons, which are both very unrelated to each other.
I will not consider "inflation" as an acceptable answer.
Expediting everything to the hole while racing the EPA costs money. Successful drillers and frackers raise rates, and everything's more expensive during a boom.
ReplyDeleteSince I understand less than half of what you say here, that makes me a newbie. Here's my guesses:
ReplyDelete1 – Improved technology? Newer rigs drill deeper and can walk (not sure I get that – think it means the rigs can be moved without disassembling and reassembling them). Newer, fancier, more capable rigs are going to be more expensive. That means the rental rate or purchase price is higher.
2 – Guar gum is more expensive (supply and demand!) and there is more use of ceramic proppants (which are more expensive than what guar gum used to cost)?
3- Good fracking crews know they are good and can get the job done much faster? They are charging more to get the job done quicker and can do so because that means faster cash flow for the owner? If I was providing a time-critical service and could get the job done 50% faster than a year ago, I would certainly charged 20% or 30% more.
4 - I'll add a long shot – maybe something in the size of the wells? Either drilling deeper or longer laterals?
With four guesses, I’ve got a good chance at hitting one of the ideas you are looking for.
ReplyDeleteIncreased number of frac stages
Increased use of sand and ceramics
Longer average lateral.
Thanks for all your work, Bruce!
Don't let some denier of Solyndra, college transcript issues, permitorium,or Kenya/Indonesia/Mercer Island -focused economic radicalism get you down.
Dear Anonymous,
ReplyDeleteIt looks as though you've made a mistake and posted on the wrong blog. You are probably looking for the OTHER blog. You know -- the one where a few folks think it's OK to insult each other. One of the reasons I'm a regular reader of this blog is because that doesn't happen here. So --- Adios Amigo.
1. With regard to the answer to the question, the answers are all great. I will let the post run for a couple more days and then throw in my two-cents worth. There is a reason I asked the question, trying to connect the dots, which I will come back to later.
Delete2. With regard to off-topic comments. I had to chuckle. Just after posting the question, I was interrupted by a) house guests; and, b) the QEP story.
I posted the first reply without reading it (a mistake). So, after the house guests departed, I came back to check the blog. I saw additional comments which did not make sense to me; they seemed to offer me support but to be off-topic. I didn't know what to make of them. Then I read the first comment: about President Obama, Solyndra, myths, etc., and I figured out what you guys were referring to. Yes, that comment was way off-topic and did not add anything to the conversation, so it's been deleted. I apologize for posting it in the first place. So, hopefully we'll stay on topic. By the way, that post, based on content, grammar, misspellings, punctuation, etc., suggests that it was sent in by Chester, who writes me regularly with similar comments.
Chester the protester.
ReplyDeleteI would say increased cost is coming from the cost of water and access to water and proppant supply.
ReplyDelete