Later, 3:31 p.m. Central Time: to the list below add this -- even with only 53 rigs in the Bakken, there are currently 2,400 wells either shut in (completed and not producing for operational reasons or economic reasons) or drilled but not completed (DUCs). Putting that in context, in the "biggest" year of the Bakken boom, less than 2,400 wells were drilled. I don't know the current rate of drilling wells, but my hunch is that 1,000 new wells will be drilled in 2017. I will sort that out later. So, when folks tell me that at some point the DUCs are completed (I add in the shut-in wells) I see at least two more years of simply bringing these wells (back) on line, even if all rigs were shut down today. My hunch: one week to bring a shut-in well back on line; two weeks to complete a DUC and get oil into the pipeline.
A reader asked me this question in the comment section from an earlier post:
What is the 2013 or 2014 equivelent rigs to our current 53. Can we get as much done with 53 as 105 did in 2014? Is there anyone using number of holes drilled to display industry momentum? Just curious.Interestingly enough, another reader sent me a link to an article that raised this same issue. I will post that link, that article, and my comments when I have more time. However, this was my off-the-cuff, not-ready-for-prime-time response regarding his comments about rig counts in the Bakken.
Do not take this out of context and do not quote me on this.
I have not had time to polish this to the usual high standards of The Million Dollar Way. LOL.
Thank you, K--------.
Sometimes I think you are one of the very few people who really understands the Bakken. Folks jut don't get it. They keep counting rigs. I keep reporting rigs on a daily basis because everyone thinks the number of rigs tells us something. But you are absolutely correct, and I've mentioned it on the blog numerous times: the number of rigs is irrelevant.
Of course, that can't be taken out of context. It depends on what one is measuring when counting rigs.
The number of rigs is important for at least two reasons.
One, the number of rigs gives one an idea of the activity in the Bakken: the more rigs, the more roughnecks, the more truck drivers, the more money being spent at restaurants and gas stations when workers get off work. The number of rigs is important to the economy.
Two, a company like Whiting can do with three rigs what it used to do with 10 rigs, so if the rig count drops from 10 to 3 by Whiting, that does not concern me. But if a new operator comes in and drills with one rig, that speaks volumes. We now have a new operator and a new rig. If two new operators come in and they each have one rig, we now have two rigs. And we have three companies drilling instead of just one (in this example).
I'm out and about right now, so I will post the WLL data later, but also, did you see the EUR type curve: 1.5 million bbls/well? This means that the CEO is not going to okay a request by his geologists or his board to drill a well if they can't convince him the payoff is relatively quick and the EUR is 1 million bbls or more.
When the Bakken boom began, folks were excited with EURs of 375,000 bbls. Then Mike Filloon was the first to note EOG with EURs of 1 million bbls. No one commented on that; deafening silence. As if folks were not paying attention. And now we see EURs of 1.5 million bbls. That's incredible.
Thanks for the note. It made my day.