Peak Oil InThe Bakken? -- Not Likely In The Near-Term -- September 23, 2018

Updates

Later, 7:54 p.m. CDT: a reader wrote --

On the Peakoilbarrel site, we are having an extended discussion regarding both the Platts' story and the ND Pipeline Authority report that was the source of the data.

I highly recommend, when your time allows, you download and scan the recent - September, 2018, ND update from the DMR site, which is the NDPA report. 

Most important data point (also mentioned in Platts'  story) is Bakken should peak in about 15 years at 2 MM barrels/day level. 

Also, at 1,200 New wells/year and $61 wellhead pricing, OVER 60 years of drilling remain. [Note: I have previously linked a similar presentation and referenced it. The presentation this writer references is at this link: https://northdakotapipelines.com/presentations/. At that link it's the September 14, 2018, presentation; if clicked on, a pdf will quickly load on your desktop.] 

Later, 5:25 p.m. CDT: a great example of why the Bakken will be in the catbird seat for quite some time, regardless of Nick's pessimism (see original post). OPEC says $11 trillion invested needed to meet crude oil demand through 2040. Source: CNBC and OPEC, both well known for integrity and impartiality.

Original Post

From oilprice:

The short answer: a resounding no.

The story: oh, as soon as I saw it was written by Nick Cunningham, I already knew the slant. LOL.

The lede:

While the Permian has experienced a drilling boom and has received tons of media attention, a lesser-known but still remarkable revival has been underway in the Bakken this year. At the same time, the increased rates of drilling in North Dakota are starting to reveal signs of strain on the basin, as drillers are increasingly forced into less desirable locations. [They are not being forced to move anywhere: the so-called Tier 2 locations becoming economically enticing as the price of oil goes up and the price of drilling/completing a well goes down.]

The Bakken was hit harder than the Permian during the oil market downturn that began in 2014, with rigs and capital diverted away from North Dakota and rerouted to West Texas. Oil production hit a temporary peak in late 2014 at 1.26 million barrels per day (mb/d), declining for much of the next two years.

However, production began to rise again in early 2017 before accelerating this year. In October, the EIA expects Bakken production to hit 1.33 mb/d, a new record high.

In some ways, the Bakken is enjoying a bit of a revival because the Permian has become overcrowded. The pipeline bottleneck, the strain on rigs and equipment, completion services, labor, water and even on road traffic has caused a lot of headaches for shale drillers in West Texas. Some shale executives have decided to shift resources elsewhere, and the Bakken has received a boost as a result.

The Bakken took over as the most profitable place for shale drillers on average this summer, at least temporarily surpassing the Permian. That may not last as the steep discounts for WTI in Midland drags down the profitability of the Permian, a situation that will resolve itself over the next few years as pipelines come online. But the improved outlook for the Bakken is notable nonetheless.

However, despite the resurgence in the Bakken, the basin is starting to suffer from its own strains. Production is still rising, but the crowded field is increasingly pushing shale E&Ps onto the periphery. The result is that the average well in the Bakken is producing less oil at its peak performance, as fringe areas are dragging down the average.

We have to get to the seventh paragraph in his article before we finally read this:

S&P Global Platts reported on the findings, noting that absolute decline is not necessarily likely in the near-term, but that the shale industry will have to ramp up drilling activity by two or three-fold to keep growing production. “The production decline is inevitable, but the timing is uncertain as to how this is going to play out,” Justin Kringstad, director of the North Dakota Pipeline Authority, said in an interview with S&P Global Platts. “The big unknown right now is how much new technology is going to impact the fringe areas of the play.”

The big story Cunningham is missing if he wants to remain the poster child for pessimism: what happens to the Bakken if the Sierra Club is successful in shutting down the DAPL?

**************************************

The Book Page

Apologies to all. I had Sophia with me at the library today so didn't have the freedom / time to look for books. I had to quickly pull two off the shelf.

Richard III: A Ruler and His Reputation, David Hospool, 2015. I have to read a biography of the royals every so often to remember their convoluted stories. I won't spend much time on this one but it will be a review. Again.

Captain Cook: A Legacy Under Fire, Vanessa Collingridge, c.2002. A distant relative, George Collingridge, did much to take away some of Captain Cook's legacy. In the process, George Collingridge came under much fire and scrutiny. Vanessa says she is out to tell the "true" story of Captain Cook and her distant relative.