Musings On The Bakken: Cold Winters

I just got back from the Bakken.

I drove cross-country from Los Angeles to Williston, a few days in the Bakken, and then Williston, back to Dallas-Ft Worth area.

The story linked below discusses the challenges the Bakken operators face during the harsh winters. It will be interesting to see how this plays out over the next few years. During my week in the Bakken, I noted that during some of the harshest weather, the operators continued to build pads, drill, and frack.

One thing the article did not mention (unless I missed it), the impact cold weather has on the rails. Anyone who has Amtrak'd knows how winter weather impacts the train. Everything slows down. Folks forget that 71% of Bakken oil is moved by rail.

Personally, I think the spring thaw and (occasional) flooding presents a bigger challenge to everyone operating and working in the Bakken.

Now the story over at Rigzone:

Data published by the North Dakota Industrial Commission’s Department of Mineral Resources showed a 48,305 barrel-a-day decline in the state’s production for the month of December.

The report attributed the production decline primarily to the severe winter weather that hit the state at the end of last year.

According to the DMR, the state experienced low temperatures of 21 to 31 degrees below zero, four major snow storms and five major wind storms in December. Oil production for November had climbed by 31,278 barrels a day to 911,292 barrels a day, for a 3.6% increase over October’s level. The production drop in December was 5.3%.

The production decline, which was clearly impacted by weather, may also be demonstrating that there is a fundamental slowing in output and activity underway, which is not a good omen for the future for America’s oil output. During December, the drilling industry, according to the DMR, operated 190 rigs, up from 184 in November. The January rig count was 188. There were 119 wells completed during December, down from the 138 wells reportedly completed in November.

The monthly report stated that the days from spud to completion for wells drilled during December increased to 132 days, for an increase of 18 days from the length of time it took to drill wells in November. Another very interesting observation from the DMR report was that there were a total of 635 wells that had been drilled and were awaiting completion at the end of December, an increase of 125 wells during the month.

What the report doesn’t show, however, is how many of the wells being drilled were Bakken horizontal wells versus vertical wells in other producing formations. If we assume that 100% of the current drilling activity is for Bakken oil, which is not an unreasonable assumption given how hot the play is, then we can look at the change in the number of producing Bakken wells to see what is actually happening to activity in North Dakota. The December Bakken producing well count showed a 40-well increase from November, which if we compare against the 119 wells reportedly completed during the month of December leaves us with 79 wells that would have been added to the drilled-but-uncompleted total. That leaves us with 46 unaccounted wells from the figures for wells drilled, in production and added to the drilled-but-uncompleted pool. We are not sure whether we should be worried about this number of unaccounted for wells, or attribute them to weather-related counting issues.