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Sunday, November 4, 2018

Case Study: The "Bakken Phenomenon" -- November 4, 2018

I'm certainly watching a different movie than than picture show that he "peak oil" folks are watching. After spending an hour or so going through the comments over at a peak oil blog, it still appears that a) folks in general don't understand the Bakken; b) folks are still comparing conventional oil experience with tight oil experience; and, c) no one is talking about the "Bakken phenomenon" that I find so interesting.

I would love to opine on what this may mean for shale and for the Bakken operators specifically but I feel I may be getting too ahead of my headlights. We'll see.

By the way, in passing, it was recently noted -- perhaps in the "throw-away" Forbes article of a few weeks ago -- that conventional exploration and drilling is incredibly inefficient compared to shale exploration and drilling.

[By the way, a reader who comments regularly at this blog, also made a comment at the peak oil blog and gave me a "shout out" by name. Much, much appreciated. Thank you, coffeeguy.]

One individual in a comment over at a peak oil blog did notice the results of the "Bakken phenomenon" when he/she was doing an "annual survey" of Bakken production to try to prove a point. The individual noted that "for some strange reason there was a jump in production in wells that were drilled in 2008 which was not explained, so I threw out that year in my analysis."

Another case study. Let's take a look at #18105 in the screenshot below.


That's a busy, busy little corner of activity in the Bakken, isn't it?

The well of interest -- #18105 -- was drilled back in late 2009. By today's standards, it was a pretty mediocre well, and quickly plateaued to 2,000 bbls of oil per month. By "conventional standards" the production should continue to slowly decline, eventually peter out, maybe a work-over or two, but eventually be plugged and abandoned. When drilled back in 2009, the EUR was probably estimated to be 350,000 bbls at best with a primary production return of 3% at best.

The well:
  • 18105, 860, Hess, BB-Federal A-151-95-0910H-1, Blue Buttes, t2/10; cum 399K 9/18;
At 400K cumulative bbls this well has already surpassed its EUR, and is only nine years old, and is expected to produce for another 25 years and will go through the typical Bakken life-cycle: drill, frack, re-work, mini-frack, re-frack.

This was an open hole frack with about 2 million lbs of sand, and about 800,000 lbs of ceramic; in other words, a small, fairly "archaic" frack.  Right, wrong, indifferent, I think of an open hole frack as a one stage frack. Today that well would haven been fracked with 10 million lbs of sand in 40 stages.

The wells being drilled in that area today are expected to have EURs of one million bbls from a primary production return of 12%.

With that as background, let's take a look at the recent production profile of #18105.

This is only from the past 24 months or so, #18105:
PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare
BAKKEN9-201829668668931690000
BAKKEN8-201828480848931658683068300
BAKKEN7-20183182398140236011456114560
BAKKEN6-201829655363151383765676560
BAKKEN5-201821451941951284588358830
BAKKEN4-20180000000
BAKKEN3-20180000000
BAKKEN2-20180000000
BAKKEN1-20182013491589257400340030
BAKKEN12-20173121352169273380838080
BAKKEN11-20172216091360188387538750
BAKKEN10-20173122142331297555955590
BAKKEN9-2017252099186167267926790
BAKKEN8-20172615981855225244924490
BAKKEN7-20173121222325295317231720
BAKKEN6-20173024702239334327532750
BAKKEN5-20173120372257392314231420
BAKKEN4-20173025642290797327732770
BAKKEN3-20173130893254396350435040
BAKKEN2-20171928402762496259425940
BAKKEN1-2017558845305305300
BAKKEN12-201615720916818388380
BAKKEN11-20162727132734182321932190
BAKKEN10-20167341465566226220
BAKKEN9-20163018981853314297029700

There is no evidence this well was re-fracked and had it been re-fracked, the production would have been significantly higher than what we see above. No one, in my view, has satisfactorily explained the "Bakken phenomenon." But one an oil well begins its decline, it's not supposed to show a jump in production, something we see over and over in the Bakken.

This jump in production won't "move the needle" when there are a small number of wells (16,000) but there is no doubt in my mind that we will see that "production needle move" when there are 32,000 producing wells in the Bakken. I could add more but that's enough for now.

This is the production profile after the well was initially completed/fracked back in 2010:
BAKKEN10-20103169146945293968996890
BAKKEN9-2010298029803230314684146840
BAKKEN8-2010258594862811915037150370
BAKKEN7-20103183628319276211920119200
BAKKEN6-2010308864882717012892107192173
BAKKEN5-201031103851040318513763137630
BAKKEN4-201030108981097755914241142410
BAKKEN3-201031165781673972523097230970
BAKKEN2-2010282223822139337629762297620
BAKKEN1-20105142851402713018454184540

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