Random Update On Hess In The Bakken -- July 23, 2015

Great article. Link sent by a reader who recently moved from North Dakota to Texas and still working for the same North Dakota company. I find it amazing how far the tentacles of some North Dakota companies reach. I digress. Here's the story being reported in the Bakken Magazine:

Even before oil prices took a nosedive that sent shock waves through the U.S. oil and gas industry, Hess Corp. was on the road to improving efficiencies and cutting costs in its Bakken operations.

The early pessimistic outlook for the Bakken has given way to the view that producers such as Hess in the Williston Basin of western North Dakota will rebound in an even-stronger, more-competitive position as infrastructure catches up to production, efficiencies improve and cost savings are realized.

“That’s the way that we’re looking at it,” says Gerbert Schoonman, vice president at Hess responsible for the company’s Bakken assets. “We are in a fortunate situation in that we’ve got a very strong position in what we call the heart of the Bakken.”

For Hess, lower prices haven’t meant a retreat from the Bakken, but instead a concentration of activity among its 610,000 net acres in the areas where the best rock for drilling exists.

More:

“Hess has got more locations than anybody else in DSUs (drill spacing units) in the heart of the Bakken,” Schoonman notes. “As a consequence, we didn’t reduce very drastically. We only went down from 17 rigs to eight rigs.”

While some producers elected to back off on well completions, Hess did not. The company doesn’t want to risk losing the gains it made after it began implementing lean manufacturing methods in 2009, an approach emphasizing the introduction of process improvements while eliminating waste.

“The reason Hess decided to execute on continuing their completions was we want to maintain a capability within our teams and have a steady stream of completions that were executed at less than $3 million per well,” says Schoonman. “The cost of completions has come down even more since the start of the year because we’ve become more efficient at it and better.”

As an example of how lean has benefitted Hess, Schoonman says it once took them an average of 40 to 45 days to drill a well in the Bakken from spud to rig release.

“At the end of the fourth quarter last year, we were already down to an average of 19.5 days,” he notes.

“It didn’t stop there because we were able to migrate the rigs we were using and the people operating them. We’re now seeing very significant numbers of wells already at less than 15 days from spud to rig release.”

Much more at the link.

Remember, I track Hess at a link at the sidebar at the right, along with most other Bakken operators.