Increased Density Drilling -- The Discussion Continues -- October 22, 2014

A reader sent me a nice Bloomberg article on increased density drilling:

Based on tighter spacing being tested now in Texas, 16 wells could be drilled on the same parcel at a cost of $5.5 million each. Even if each well yields less, about 400,000 barrels, that’s still a recovery rate of 6.4 million barrels from the same land at a cost of $88 million. Profits in this scenario at today’s oil price would amount to $424 million, or almost triple.

To counter production declines in individual wells, companies are using a combination of methods, including drilling wells that extend farther underground horizontally and using more sand to prop open cracks during fracking. Data from EOG’s tight well spacing tests in Texas’s Eagle Ford are showing the tactics are helping producers keep per-well recovery the same, or even higher.

Tighter spacing was the primary reason EOG boosted its estimate for how much oil and gas it may be able to get out of the Eagle Ford by 1 billion barrels in the past year. The company’s use of spacing and other techniques has helped top operators such as EOG reduce their costs to $46 a barrel in the formation, according to Wells Fargo & Co. That’s about 32 percent below the average across the area estimated by ITG. 

Did you all see the "break-even" cost being suggested?

This is an excellent article, especially for newbies. I don't agree with some of the assumptions but at least an article like this puts everything on the table for those new to the discussion.

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Speaking of Increased Density 

Four more permits today for little Stockyard Creek east of Williston. Zavanna permits. More later.