Wednesday, December 20, 2017

The Bakken Strikes Back! -- Richard Zeits -- December 20, 2017

Let's see if Mr Zeits mentions the new record set by North Dakota.

Link here, over at SeekingAlpha. In case that link breaks, the story was re-printed by

  • October production data for the Bakken validates operators' claims of strong early-time well performance in the play's core
  • current prices provide a powerful growth stimulus not yet reflected in the volumes
  • Continental Resources has advertised 15-month payouts for its wells in the Bakken Core in a $50 per barrel WTI environment, which implies exceptional returns
Data points:
  • The preliminary data shows a ~76,000 barrel per day step up in October for production from the Bakken. This equates to ~7.2% growth - in one month. Previously posted.
This is so cool: I posted almost the same graph a month ago:

More, from the linked article:
The report gives fresh food for thought to those investors who have written the Bakken off as a play that is running out of prolific locations, is uneconomic at current oil prices and therefore is irrelevant as a contributor to supply growth unless oil prices rise significantly above the recent levels.

We assume the cost to drill, complete and connect a new well of $7.5 million. Such wells are likely to reach payout in less than three years. In our assessment, many new wells in the Bakken Core would fall within that category (excluding infill wells in existing drilling units on tight downspacing, which may fall short of this threshold).
No, I did not see it. No mention that North Dakota set an all-time BOE production record in October, 2017.

And, of course, no mention of "Peak Oil." "Peak Oil" doesn't work for individual wells in unconventional plays; doesn't work for oil fields; doesn't work for basins; doesn't work for nations; doesn't work globally.

Many, many graphs at the linked article. Will archive.

By the way, do you remember this headline article in Forbes: the beginning of the end for the Bakken shale play by Art Berman. Another doofus. The lede:
The decline in Bakken oil production that started in January 2015 is probably not reversible. New well performance has deteriorated, gas-oil ratios have increased and water cuts are rising. Much of the reservoir energy from gas expansion is depleted and decline rates should accelerate. More drilling may increase daily output for awhile but won't resolve the underlying problem of poorer well performance and declining per-well reserves.

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