Economical? The Jury Is Still Out

A question posed elsewhere gives me an opportunity to just toss something out which I've filed under: the jury is still out.

Periodically I see comments made by folks about non-economical wells in the Bakken without any substantiating data.

One observation: I see very, very few abandoned, shut-in, or plugged Bakken wells that have been drilled since 2006. I understand that it is time-consuming and an added expense to plug a well, and with manpower at a premium, it's probably even a bigger deal. Folks have suggested that is the reason we do not see more abandoned holes.

EXCEPT FOR ONE THING: as long as a well is producing, it holds the lease by production.

But, with pad drilling, things are different. Once a well is hooked up to a pipeline, operating expenses for a producing well are very, very low. In the old days, it would be hard to justify putting a pipeline into a remote well that was not producing much oil; but the trucking costs would have been a challenge. With pad drilling, if subsequent wells are better (which they most likely will be -- for a number of reasons), the operator might as well leave the original "pilot" well alone, even if production is small. A pipeline will be brought to the multi-well pad and the marginally-producing well will simply be hooked into that well. In addition, assuming the price of oil increases over time, that marginally-producing well may actually look better over time. 

But I would think if a particular well was uneconomical, operators wouldn't be quick to drill another well in that location, unless they felt they could do better.  The MRO Vorwerk well recently drilled seems to be a so-so well. It was stimulated with 2.4 million lbs in 30 stages, not an inexpensive proposition.

• 21286, 246, MRO, Vorwerk USA 14-34H, t1/12; cum 17K 8/12; 30 stages, 2.4 million lbs

And now I see MRO has a permit for another well just 50 feet south of that well:

• 24078, loc, MRO, Vorwerk USA 24-34H, 

The well file suggests multiple formations with an oil show. The well file also suggests this should have been a better well based on background gas units and the height of the flare.

The monthly production for the first Vorwerk well above suggests more work (possibly) to be done. These are not impressive early month production numbers for a Bakken well, but as noted above, the jury is still out. Lots of rambling to suggest this: I'm not sure what the definition of a "non-economical Bakken" well is.

Monthly Production Data

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	8-2012	7	785	920	202	414	0	378
BAKKEN	7-2012	15	1263	1331	392	691	0	609
BAKKEN	6-2012	10	1535	1410	574	771	0	732
BAKKEN	5-2012	14	2293	2442	1117	402	0	328
BAKKEN	4-2012	26	2747	2870	1476	1473	0	1325
BAKKEN	3-2012	29	3936	4091	3368	2012	0	1869
BAKKEN	2-2012	26	3655	3502	3912	3155	0	3008
BAKKEN	1-2012	9	1088	593	80	1157	0	1103

Having said all that, one company in the Bakken I am not able to sort out: Baytex. This is not an atypical well for Baytex, though some recent Baytex wells have improved significantly:

• 20587, 97, Baytex, Colby 23-14-160-99H-1PB, long lateral; Three Forks well, Burg oil field, t8/11; cum 27K 8/12; 20 stages; 1.93 million lbs;

Baytex is one of the more active drillers in the Bakken. It is interesting to compare cumulatives of Baytex wells with those of other active Bakken drillers.