Are Operators Using The Relaxed SI/NC Rules To Delay Reporting Otherwise "Confidential Material"? FAQ, Page 2

This is Page 2 of the FAQs

FAQs, Page 1

Note: for readers with knowledge about the Bakken, and particularly the new SI/NC rules, your input would be much appreciated. I posted my response below but could certainly be wrong on some of the details. 

In response to a post regarding a well on SI/NC (DUC) status, a reader wondered whether operators might be using the relaxed standards to delay reporting otherwise "confidential" information. It's a very good question because the well at the linked post certainly must be fracked and yet it remains on the SI/NC list without a completion date, an IP, or any frack data at the file. It's possible the operators are using the relaxed standards to delay reporting fracking data, but that's hard for me to accept. [Later. I was completely wrong on this. This is very, very basic. Even if a well goes to SI/NC, when it comes off conf all data must be published; SI/NC does not delay reporting activity.]

[Update: see first comment; this particular well has been fracked; information at FracFocus.]

Below is my "official" response to the question, but I can see where I might be wrong.

This will also be tagged as Page 2 of FAQ.

101. Might Bakken operators use the new relaxed standards to delay reporting otherwise "confidential" information?

This is how I see it. At the six-month mark, the wells come off the confidential list. In the old days, if they were not completed by that time, they went to DRL status. That was because once a well reached total depth, the company would frack the well per the fracking schedule, and the state gave the operators a year in which to complete a well once it was spud. But regardless, it was no longer confidential.

Some time ago, early this year, before the NDIC acted, the operators simply drilled to total depth and told the NDIC they were not going to complete the wells until some time in the future. I assume the operators were waiting to see if prices changed and, if not, would work with NDIC to take next step.

The NDIC took the next step, relaxed the standards, and the wells now come off the confidential list at the six-month mark, and if not completed, and if the operator does not plan to complete them within the year, they go to SI/NC (Shut In/Not Completed) status, or in shorthand, DUC -- Drill Uncompleted. If they plan to complete them or are in the process of completing (fracking) them at the time they come off the confidential list, they go to DRL status.

But in all cases, at the six month mark, they are no longer on the confidential list.

When the wells come off confidential list and go to SI/NC status, the file report now contains the sundry forms that are required.

To answer your question: No, the operators are not using SI/NC status to keep their well information confidential. When a well is put on SI/NC status I know everything about the well from the file report had the well been reported as active. The only thing missing is the frack data (and the IP) because the well has not yet been fracked. And, of course, if not completed, no test for an initial production number. I'm not even sure an IP is required by law (I see some wells with no IP reported) and there is no rule on how an IP must be calculated based on what little I know about following the Bakken since 2006 or thereabouts.

Second part of note: there is a difference between royalties getting paid and the confidential list. Once an operator starts selling the oil, that information must be made known to the state. That is not confidential. Even if they start selling it the month they drilled (never happens), they have to report production to the state. (There is a lag time - 30 - 90 days or something, which I've talked about before but have long forgotten the specifics. But that's simply an administrative fudge to give the operators time to get the paperwork in order, etc., etc.)

There may be typographical errors in this note. There may be factual errors. This is how I understand it; I could be wrong, but I bet I'm pretty close to right.

102. What do you mean by "choking back"? This comes from the posting of November 7, 2015.  At that link, see my comments. I have been using the phrase "choking back" incorrectly. I have been / had been using it to describe any situation in which it appeared the operator was purposely limiting production of oil from a given well for a particular reason, often associated with the price of oil. As a "broader" example, I would say that the oil and gas industry is "choking back" production in the state of North Dakota due to low prices. This is not the conventional use of the the phrase in the oil and gas industry, at least as far as I know. Obviously, wells are taken off-line for operational reasons (nearby fracking, putting in pumps, etc), and the operator is purposely taking the well off-line which will obviously limit oil production. I will probably consider using different terminology going forward but consider my use of "choking back" in the past as incorrect in most instances.

103. Active rigs: there is a discrepancy between what the NDIC reports and what Baker Hughes reports. See this post.