In The Big Scheme Of Things, Weekly Changes In The Rig Count In The Bakken Don't Matter -- August 20, 2019

Idle rambling before I call it a day.

Back to my "rigs don't matter."

I think there's a corollary to this theme.

Unconventional plays will provide long time work to many more folks than conventional plays ever did. 

Having grown up in a conventional oil play, the Williston Basin, 1951 - 1969, it was my worldview (myth) that a few vertical wells were drilled every year; some years there were more wells drilled (a mini-boom) and then many years just a few wells drilled.

Once these wells were drilled (no fracking), a pump was placed on the well, and the wells simply pumped day in and day out. Occasionally, very occasionally, one might see a work-over rig but the work-over rigs were rare enough in the Williston Basin, 1951 - 1969, that we actually commented on them if/when we saw them.

We would see occasional oil trucks of some nature, and occasionally we would see a seismic crew with several trucks, but that was about it. Day in, day out, pumps pumping, but not a lot of activity once the wells were drilled, 1951 - 1969.

The Bakken boom, the shale revolution, 2000 - 2019 is completely different.

1951 - 1969: 18 years.

2000 - 2019: 19 years.

The Bakken boom, the shale revolution, is completely different.

Wells have become centers of activity. Unlike the conventional wells, the current horizontal fracked wells are a bundle of activity.

Drilled.

Pipelines put in: fresh water; crude oil pipelines; produced water. Pipelines or trucks.

Shut in (DUCs) for up to two years.

Fracked (which requires a whole new skill set).

Sand. Fresh water. Trucks, trucks, and more trucks. One can pipe fresh water to wells for fracking, but one can't pipe sand to pads (at last not yet). More work, more people.

Sand pits: Wisconsin, Michigan, Minnesota, Texas. More work, more people.

Ceramics: China.

While neighboring wells are fracked, older (producing) wells are shut in (which requires human resources).

Neighboring wells fracked.

Older wells: work-overs.

Older wells: mini re-fracks, work-overs, major re-fracks.

Mini re-fracks and major re-fracks need sand. The major re-fracks will use more sand than the original frack if the original frack was accomplished before 2012. Sand is not a one-time thing for unconventional wells.

And, over and over, and over.

Obviously rigs are important but in the big scheme of things, any one Bakken well will see a rig for about two weeks at most (three days to drill vertically; one day to drill the curve; three days to drill the lateral). Seven days to drill to depth is the goal.

But then, the Bakken well becomes a beehive of activity over the next ten, twenty, or thirty years. Impacted by neighboring wells; work-overs; mini-re-fracks; major re-fracks.

And flaring. In the old days, because of the spacing one might see a single well in any given section, a few more in better sections, but often a single vertical well was it. That was it. A good / great vertical well did not guarantee another good / great vertical well in the same section. So there wasn't a lot of flaring.

Now, one Bakken well in any given section is going to lead to pad drilling: four wells, eight wells, twelve wells, or more.  And they all produce a lot of natural gas over time generating more work for more folks.

And with all this activity: a typical Bakken well is going to "see" a drilling rig for seven days during those 35 years.

Just one more example at this post.

Note: some Bakken wells will be re-entered; so some Bakken will experience a second rig. But it appears that will be rare.

And we haven't even started to discuss EOR. 

Break, break, break.

I consider it a much better situation if the number of rigs drop to 30 or 20 or even 10 if production in the Bakken continues to set new records. Or if producers are meeting their production goals. CLR with its Long Creek Unit plans to drill 56 wells over the next two years with two rigs.

850 wells drilled/complete/brought on line each year divided by 56 wells = 15.

15 x 2 = 30 rigs.

Something will be drastically wrong if the rig count needs to go back to 200 to maintain production.

In fact, I'm kind of surprised that the active number of rigs in North Dakota has remained steady at around 60 rigs for so long (Baker Hughes counts 47 - 50). Why so many rigs when fewer would be adequate? Because there are so many operators in the Bakken. If there are 30 operators in the Bakken, they pretty much each need at least one rig to consider themselves "active" in the Bakken.

Texakota
Newfield
Enerplus
XTO
SHD
BR
Petro Harvester
MRO
Bruin
WPX
CLR
Equinor
Hunt
Slawson
Resource Energy CAN-AM
QEP
Hess Bakken Investments II
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Sinclair Oil & Gas
Petro-Hunt
Zavanna
Oasis
Murex
EOG
NP Resources
Kraken Development
Denbury Onshore
Petrogulf
Crescent Point Energy
Missouri River Resources ND, LLC
White BUtte Oil Operations, LLC
Whiting
Nine Point Energy
Lime Rock Resources
Liberty Resources Management Company, LLC
Petroshale
Rimrock Oil & Gas
Freedom Energy Operating, LLC