Not Ready For Prime Time -- Probably Shouldn't Be Posted -- October 26, 2017

Updates

Later, 2:30 p.m. Central Time: see first comment. Reader is exactly right. When I get time I will expand on this.

Original Post

It is generally accepted that in the better part of the Bakken we will eventually see as many as 32 wells in each drilling unit of 1280 acres. Of course, this is all predicated on the economics. The Saudis have recently suggested that American shale operators will "eventually" run out of "Tier 1" drilling locations.

Much of the Parshall oil field would be considered a Tier 1 oil field in the Bakken. The western half of the Parshall oil field appears to be "better" than the eastern half.

Earlier I posted this graphic (this is in the eastern half of the Parshall). At the link, note that a short lateral, using old completion strategies, drilled back at the beginning of the boom ten years ago, has already produced almost a half-million bbls of oil.

Note the sparsity of wells in this area. Again, remember, it is generally accepted that in the better part of the Bakken we could see as many as 32 wells in each drilling unit. The graphic above is in the eastern half of the Parshall, generally considered not as good as the western half which is an incredibly good area (but not the best in the Bakken).

Now, let's zoom out a bit, but staying in the Parshall. I'm staying in the Parshall because some folks have told me that the Parshall is nearing its "saturation point" as far as any new infill drilling will occur.

In the graphic below I've tried to note the number of wells in actual and hypothetical 1280-acre drilling  units. I say "hypothetical" because many Parshall wells are short laterals (640-acre spacing). In each section below (640 acres), I note the number of horizontals passing through as if they were were 1280-acre spacing. It's very, very inaccurate but it gives me an idea of how many horizontals are actually in any given or hypothetical 1280-acre drilling unit. In some "boxes" I have estimated on the high side; in other "boxes" I have estimated on the low side. It was done quickly and without a lot of thought.  And, yes, I have an agenda. And there are other errors. Everyone will have their own estimates.

But in the big scheme of things it gives me an idea of how many more wells are left to be drilled if we are going to show 16 wells in each box (or 32 wells/1280-acre drilling unit).

I suppose a much better way, in hindsight, would have been to simply count the number of sections in the graphic and then count the number of wells and extrapolate from there. That would have been much more accurate.

So this is really not ready for prime time. There were better ways to do do this, but it is what it is.

The graphic:

Compare the Parshall graphic above to a portion of the Grail oil field. The Grail oil field is much farther along than the Parshall, but even still, the Grail is averaging about 8 horizontals per 1280-acre drilling unit, a long way from 32 wells / drilling unit.

If the Saudis are relying on American oil companies to run out of Tier 1 drilling locations, they may have a long wait at $50 oil. At $60, the wait gets longer. At $70, the wait gets even longer. No one expects oil to hit $70 before the end of 2018.