Getting Ahead Of Our Headlights, Part II -- June 23, 2015

For newbies, this is an incredibly important post, that takes us back to the early days of the Bakken. It gets us back into the discussion of primary, secondary, and tertiary recovery. The following all has to do with primary recovery.

In the beginning, the general consensus was the the amount of oil recoverable through primary production was estimated to be 3%, perhaps less. Some estimated as much as 5%. However, when I started running the numbers, and looking at the press releases, I was convinced that 8% recoverable through primary production was more likely than 3%, and there were reports back as early as 2012 suggesting rates of recovery could be much, much higher.

Even a one percent increase in recovery through primary production means as much as an extra 5 billion bbls (500 billion bbls original oil in place [OOIP] x 0.01 = 5 billion bbls.

3% through primary recovery: 15 billion bbls

6%: 30 billion bbls

9%: 45 billion bbls (and I think that's the current conservative general consensus)

But could it be more?

Earlier posts of interest:

• Getting ahead of one's headlight, June 11, 2013
• Recovery rate in the Bakken, July 28, 2013
• EOG on the recovery rates in the Bakken, September 9, 2012
• USGS Survey, April 30, 2013
• Whiting: how about 20% recovery rate in the Bakken? March 6, 2013
• Bakken OOIP Estimates, July 18, 2014

From Mark Perry, Carpe Diem, via an "insider" in the Bakken, June 23, 2015:

One more fact that I’ll remind you of, just to blow your mind a little bit more. Six or eight years ago we were estimating a recovery factor of just 3.5% in the Bakken shale reservoirs from our horizontal wells. With additional work, micro-seismic study, well production history, big data analytics, etc., we’re now estimating that we’re recovering 15-18% of the oil in place.

We further estimate, with our current technology, that the technically recoverable oil in the Bakken is 65 to 90 billion barrels.

Let’s pick the midpoint at 78 billion barrels of recoverable oil and assume a recovery factor of 16.5%. That implies we have about 470 billion barrels in place, of which 78 billion barrels can be recovered.

Now let’s assume that over the next decade that the drilling and extraction technologies continue to improve and we are able to harvest another 5% of the oil in place — again, we now know exactly where it is and we know the exact profile of the geology/geophysics of the shale rock.

That’s another almost 24 billion barrels of crude oil (470 billion x .05), which would be equivalent to discovering another Prudhoe Bay size oil field in the Bakken area! All it takes is more experience and technology gain to get the oil we know is there.

The article also takes us back to OOIP. It's hard to say exactly what the "insider" was suggesting when he wrote:

 ... we’re now estimating that we’re recovering 15-18% of the oil in place.

We further estimate, with our current technology, that the technically recoverable oil in the Bakken is 65 to 90 billion barrels. 

I can only assume the "insider" was "equating" the two. So working backwards:

15 to 18% of what = 65 to 90 billion bbls

15% of what = 65 billion bbls OR 18% of what = 90 billion bbls.

"of what" = 65 / 0.15 --> 433 billion bbls of OOIP.

"of what" = 90/0.18 --> 500 billion bbls of OOIP.

At the time 500 billion bbls OOIP was first being bandied about (before 2013), only the middle Bakken and the upper Three Forks (which we now call the upper bench or the first bench of the Three Forks) were being targeted (and then, mostly the middle Bakken; very few wells were actually targeting the upper Three Forks prior to 2013).

These discussions help explain the price operators were willing to pay for mineral acres back in the early days and why the Bakken remains so exciting.

So, now, to collect the Mark Perry Carpe Diem three recent posts on the Bakken:

• Part I
• Part II
• "Part III"

Comparing the Bakken and the Permian.

• September 22, 2014
• USGS slide, May 2, 2013
• Mike Filloon on the Permian, February 13, 2013 
• Production per well, the Bakken vs the Permian, July 6, 2014
• Production per well, the Bakken vs the Permian, December 14, 2014
• The Bakken-Permian Pond, July 21, 2011

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A Personal First

I was the first one to review a new book on Amazon. My review here. The book here. I also just posted my review of Oliver Sacks' autobiography. The book here. Generally speaking, I find there are more than enough reviews, and more than enough words for each review, that my reviews can be short and sweet.

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Coming Into Work A Bit Later

I called my dad to wish him a Happy Father's Day and to ask him how his day was going.

He was in a great mood as usual.

I called him at the office. He mentioned that he was just getting in. I had called about 10:45 a.m. He says he was now coming in a bit later than usual. Instead of coming in at 9:30, he now comes in about 10:30 every morning.

He says there is not a lot for him to do, so he can come in a bit later. I guess he's sort of on auto-pilot at age 93 years. His biggest problem is making sure his broker understands his "orders." He remains excited about his portfolio, particularly Apple. He got in relatively early; I missed that one. He thought Apple was a grocer or supermarket of some sort years ago. He knows that the company is having some problems now with the music end, but doesn't know the particulars.

I didn't ask, but he probably won't buy the Apple Watch.