The Bakken As Laboratory; 48 Wells In A Spacing Unit

Hold this thought:

SeekingAlpha is reporting:

Initially EOG believed that from 640 acres of its Eagle Ford property the company could recover 4.5 million barrels using 65 acre spacing.

Through trial and error, EOG has discovered that 40 acre spacing is actually going to work better which means the company will increase the amount of oil recovered by 42% and the net present value of that acreage from $76 million to $103 million.

In an age of increasing oil prices, I believe holding companies like EOG that control the most oil in the ground is a sound strategy. Time and experimenting with how to develop the land is going to increase the value of the acreage these companies control.

CLR is testing the same hypothesis in the Bakken.

Related links:

• Graphic of lower bench drilling
• Approaching one million bbls -- the monster CLR Whitman well  

Before we get started, let's break down the paragraph in bold:

• through trial and error
• 40-acre is better than 65-acre spacing in some areas of the Eagle Ford
• closer spacing will increase the recovered amount of oil by almost 50%
• closer spacing will increase the value of that acreage from $75 million to $100 million (not trivial)

So, now, back to the Bakken.

• First it was one well in each section; the face of the Bakken was CLR. 
• Then, evidence that middle Bakken and Three Forks do not communicate (CLR). 
• Then it was four-well ECO-pads (CLR).  
• Then it was six-well, eight-well, and 10-well pads (CLR, QEP). 
• Then it was multi-well pads targeting the middle Bakken AND the Upper Three Forks (CLR).
• Then it was pilot projects targeting the MB, and the top three benches of the TF (CLR, KOG).
• Evidence that new fracks help neighboring, older wells (I forget where I posted that; I will see if I can find the post later).
• Then massive fracks (62 stages; 12 million pounds; EOG).

Now, back to an early graphic of targeting multiple sub-formations in same spacing unit (same link as above).

Now, a graphic of how CLR spaced twelve or fourteen wells in one spacing unit in the past. These are the Hawkinson wells in Oakdale oil field. Note how the wells are spaced across (east-to-west) the 1280-acre stand-up (running north-to-south) spacing unit:

It's hard to tell, the wells are pretty bunched up in the small graphic, but there are 12 wells in the north running south (3-1-5-3) and then two additional wells running from the south (14 horizontals total in this spacing unit). And, oh by the way, two old Madison wells that are now abandoned (one produced 110,000 bbls of oil; the other 340,000 bbls of oil).

So, stopping for a minute to catch our breath. Look at again at the milestones above, looking at the Bakken as a laboratory, perhaps led by CRL, QEP, CLR, KOG, and many others.

Now, and this gets most interesting. This was noted by a reader (thank you). I don't read NDIC cases or orders so I would have missed this. I would have eventually seen it, but I would not have seen the back story. And in this case, the back story is as important as the outcome.

This is a graphic from NDIC Case # 20678 and NDIC Order # 22983:

I hope you all see what I'm seeing (and what I think the reader who sent me this link saw); I hope I am not misreading this.

First, this is a stand-up spacing unit, just like the Hawkinson wells in the Oakdale oil field.  These are sections 28 and 33 in T146N-R95W, in Chimney Butte oil field. [Chimney Butte is southeast of Oakdale; they touch at their southeast/northwest corners; both in Dunn County, both outside the reservation.]

This is what I'm seeing.

In the Oakdale/Hawkinson wells, the wells were spaced across the entire spacing unit, west-to-east.

However, in the Chimney Butte/Hartman wells, CLR will place 12 wells (ten new ones, two existing ones) in one-half of one-half the drilling unit. The wells will target the middle Bakken, and the upper three benches of the Three Forks.

If successful, this could work out to 48 wells in one 1280-acre spacing unit. The norm in the Bakken is the long lateral (1280-acre spacing) but if they ever go back to short lateral/640-acre spacing, one could see 96 wells in two sections. Of course, by that time, I will be long gone. And, of course, by then, perhaps water flooding or EOR. I'm still convinced that best recovery occurs closer to the heel (closer to the kick-off point) than the toe (where the horizontal ends). But I digress. Ignore this paragraph.

Now the back story that is in the case/order that I would not have seen had the reader not sent it to me (again, a huge thank you). Both MRO and BR, who have working interests in these wells, objected to the proposal. They wanted a full hearing by the commission, or something along that line (I went through it quickly, and probably missed some of the details). The arguments submitted by MRO and BR: a) too many unnecessary wells; b) correlative rights; and, c) the risk of setting a precedent for density drilling.

My two cents worth, regarding the objections:

• Setting a precedent: ever since the 1960's with the adoption of situational ethics, "precedent setting" pretty much went out the window. By the way, a lot of wind was taken out of the "precedent-setting" argument: CLR already has a 14-well pad in the northwest corner of one section southwest of Williston (see graphic at the bottom of the post).
• Correlative rights: a grab bag term; in a cultural analogy, it is nothing more than playing "the race card." MRO and BR were simply looking to get additional mineral rights owners on their side. My hunch: mineral owners were thrilled to be telling their friends there could be as many as 48 wells on their spacing unit, and all paid for by the oil companies (except for those mineral owners who choose to participate). 
• Too many unnecessary wells: that's a legitimate argument. But we will never know if we don't try, will we? See milestones and links above, as related to the Bakken "as laboratory."

Are you still "holding that thought"? The one at the very top of the blog: through trial and error EOG discovered that 40-acre spacing was much better than 65-acre spacing in the Eagle Ford in 640-acre sections. Trial and error.  The Bakken as laboratory. We won't know until we try.

A few years ago, MRO and BR could have objected to multi-well pad drilling due to a) unnecessary wells; b) setting a precedent; and, c) correlative rights.

I see CLR as the scrappy fighter that keeps pushing the envelope (to coin a phrase) whereas BR (part of COP) as being very, very conservative, and plodding. MRO, ditto, but it pains me to say that.

With the Feds ready to lay down new fracking rules, it might be nice to get as many of these permits approved as possible. Once those rules come down, a nine-month inventory (or more) of permits might be nice to have.

There are still more story lines to this case/order but I will stop for now.

The graphic of CLR's 14-well pad in the northwest corner of section 6-153-101.

The section lines, in red, are horizontal/vertical. The red diagonal line is the Missouri River bridge southwest of Williston. The blue is the Missouri River; the dotted line is the Williams County/McKenzie County line. The little man on the bank is landing an 8-pound walleye. Just joking.