Seven Hundred Fifty Wells Waiting To Be Fracked -- January 21, 2015

Something to note about the monthly Director's Cut: some information is in real-time, such as the comment section and the number of wells waiting to be completed. At least, the wording suggests that the number of wells waiting to be completed is fairly current.

On the other hand, the production data is a full six weeks old.

As long as I've been following the Bakken, it seems there were always 350 - 400 wells waiting to be fracked.  It caught my attention when last month's Director's Cut suggested there were 600 wells waiting to be fracked, and then this month the news was staggering: up to 750 wells waiting to be fracked.

The March Director's Cut (data current as of the end of January) should be very, very interesting, where fracking stands.

I look at pricing of oil this way:

• Saudi Arabia can affect the price of oil immediately (a simply announcement)
• shale oil can affect the price of oil over 6 to 9 months
• deep-sea drilling, off-shore drilling, large projects won't impact the price of oil for years

One has to ask the question, how fast can shale oil affect the price of oil?

Back in 2007: imagine the time it used to take to get the lease, get the permit, build the pad, build the road, get the rig on the pad, wait to get a frack team in place, to frack one well on one pad.

Now, 2015: the infrastructure is all there. The pads are built, the roads to the pads are built; there is an excess of rigs. Putting a rig on the pad and then drilling can take a couple of weeks. Fracking is measured in days, although it may take a week to get water and proppants on-site. And instead of fracking one well on one pad, operators can frack many wells on the same pad almost simultaneously, or certainly very quickly sequentially.

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Data Points To Follow

January 22, 2015: a review of 1H14 wells that were on DRL status prior to the review.

January 19, 2015: based on daily activity reports, this is the date that it appears North Dakota operators began "circling the wagons." Obviously things were put in motion about 30 days earlier. The January dockets (released in December) were not particularly noteworthy with regard to activity slowing down.

January 15, 2015: number of permits being issued on a daily basis are dropping off but still averaging about six new permits daily.

January 15, 2015: wells waiting to be completed are most likely hitting a new record, well above the previous month's data; said to be around 750 wells waiting to be fracked.

November 30, 2014: new production record; numbers not known until Director's Cut released on/about January 15, 2015.

October 31, 2014: wells waiting to be completed continue to edge up; data in Director's Cut is pretty much real-time.

October 1, 2014: For my purposes I've pegged the slump in oil prices to have begun October 1, 2014. Operators may have seen it coming months earlier. Certainly new NDIC rules on flaring and conditioning were already in place or soon to be in place, a fact well known by the operators.