Bakken Reality Check -- 2015 -- March 18, 2018

Note: I'm not sure if this is ready for prime time. I will post it anyway. Don't quote me on any of this. I'm still working through it. The reason for doing this was the developing meme that North Dakota has to add 157 net new wells month-over-month to maintain production at 1.2 million bopd.  It was my impression that North Dakota has not come close to 157 wells/month (1,884 per year) and yet the state has increased production year-over-year in the past eight months.

Note: the spreadsheet below was created very, very quickly. There are likely to be typographical errors. The data was taken from the NDIC statistics site. I do not know why daily production data and number of producing wells at the NDIC statistics site varies slightly from the daily activity reports.

I was curious about comparing the change in the number of producing wells (third column), the annual change in the overall number of producing wells, and the change in production.

I was curious to see if comments/projections at "Bakken Reality Check" produced back in 2015 held true. Compare this table with the screenshot of Figure 5 from that linked "Bakken Reality Check" below the spreadsheet.

Month	# # of producing wells	Producing wells	Crude oil production (bopd)	Crude oil production (bopd)	Producing wells	Crude oil production (bopd)
		Change From Previous Month	BOPD	Change From Previous Month	Change from one year ago	Change from one year earlier
Jan 18	14,002	-7	1,175,638	-5,681	1,014	141,470
Dec 17	14,009	-14	1,181,319	-15,657	990	238,997
Nov 17	14,023	52	1,196,976	13,166	815	162,492
Oct 17	13,971	78	1,183,810	76,465	817	140,117
Sept 17	13,893	130	1,107,345	18,027	834	135,600
Aug 17	13,763	102	1,089,318	41,219	783	106,873
Jul 17	13,661	53	1,048,099	15,226	702	18,255
Jun 17	13,608	47	1,032,873	-8,122	678	5,507
May 17	13,561	118	1,040,995	-9,481	705	-6,153
Apr 17	13,443	129	1,050,476	-154	703	8,438
Mar 17	13,314	115	1,050,630	16,382	566	-61,157
Feb 17	13,199	211	1,034,248	80	484	-85,389
Jan 17	12,988	-31	1,034,168	91,846	162	-87,460
Dec 16	13,019	-189	942,322	-92,162	269	-209,598
Nov 16	13,208	54	1,034,484	-9,209	436	-147,540
Oct 16	13,154	95	1,043,693	71,948	330	-129,327
Sep 16	13,059	79	971,745	-10,700	459	-189,998
Aug 16	12,980	21	982,445	-47,399	324	-205,437
Jul 16	12,959	29	1,029,844	2,478	371	-178,085
Jun 16	12,930	74	1,027,366	-19,782	454	-184,628
May 16	12,856	116	1,047,148	5,110	588	-157,166
Apr 16	12,740	-8	1,042,038	-69,749
Mar 16	12,748	33	1,111,787	-7,850
Feb 16	12,715	-111	1,119,637	-1,991
Jan 16	12,826	76	1,121,628	-30,292
Dec 15	12,750	-22	1,151,920	-30,104
Nov 15	12,772	-52	1,182,024	9,004
Oct 15	12,824	224	1,173,020	11,277
Sept 15	12,600	-56	1,161,743	-26,139
Aug 15	12,656	68	1,187,882	-20,047
Jul 15	12,588	112	1,207,929	-4,065
Jun 15	12,476	208	1,211,994	7,680
May 15	12,268	143	1,204,314	32,498
Apr 15	12,125		1,171,816

The screenshot from the "Bakken Reality Check" linked above:

"Bakken Reality Check" suggests that operators need to add 157 wells each month (1,884 per year) to maintain peak production at 1.2 million.

Between the autumn of 2015, when the Bakken Reality Check was published, and January, 2018, the most recent month for which data has been released:

• due to the Saudi Surge (January 2015 - January 2017) and the severe decline in the price of WTI, North Dakota crude oil production dropped from 1,151,920 bopd (December, 2015) to a low of 942,322 bopd one year later (December, 2016)
• however, after things "started to return to normal," North Dakota crude oil production actually rose to 1,196,976 bopd by November, 2017
• from November, 2015, to November, 2016, there was an increase of 436 producing wells -- well below the 1,884 new wells / year that "Bakken Reality Check" suggested would be needed to "maintain" -- and one could argue, ND came close to "maintaining" production
• from November, 2016, to November, 2017, there were only 815 additional producing wells, again, well below the 1,884 threshhold suggested by "Bakken Reality Check"
• November, 2016 to November, 2017: production increased by 16% with number of additional producing wells well below the 1,884 threshhold
  

Again, I did this very quickly, and there are likely to be errors in my numbers, and my methodology, but I wanted to take a quick look at the "Bakken Reality Check" projections back in 2015 to what has happened since.

This is very much in line with an increasing number of analysts noting that there seems to be a "negative decline rate" developing in shale plays.

See the article by oilprice.com editor Nick Cunningham: "Can the oil industry continue to lower decline rates at mature fields?"

And this post from earlier this month:

“I cannot remember ever in my career having seen a negative decline rate,” the British oil-giant’s chief executive officer said in an interview on the sidelines of the CERAWeek by IHS Markit energy conference in Houston.