Friday, September 20, 2019

This Is Absolutely, Positively, Not Happening InThe Bakken -- September 20, 2019

The note below is pretty much complete; there may be some fine tweaking but consider it done.

Off The Radar Scope: Rigs Do Matter 

This is interesting. I had not thought of this. Because there is so little national news regarding the Bakken and because the Permian is getting all the press, a lot of folks outside the region mistakenly think the Bakken has completely slowed down. An operator looking for capital among investors (east coast, west coast) were surprised to hear that the Bakken was still very, very active. Potential investors were surprised to hear that North Dakota was producing as much oil with 50 - 60 rigs as the state was producing (actually more) than when there were 200 rigs in the Bakken (lousy grammar on my part).

So: the number of rigs does matter when it comes to "demonstrating" activity (and perhaps investor interest). That driller, by the way, suggests that North Dakota would likely produce upwards of 2 million bopd in about three years. If the takeaway capacity was sufficient and the price "right," I think we could be at 2 million bopd now.

In addition, see first comment:
Regarding the linked articles below: Basic concept, not news. Poorly explained (some mistakes).

Also, despite the shift to closer spacing [in the Bakken?], we are still not seeing a dropoff in performance. Obviously there must be other aspects that are improving and the net result is okay, on average.
The Note

The world's top oil basin is running out of space -- link here.
Permian "child" wells may cut oil recovery up to 20%, bank says -- Bloomberg.

I'm in a rush right now so I will have to come back to this, but this is so not happening in the Bakken.

First of all, it's an old story regarding the Permian, previously posted on the blog, but both Bloomberg and oilprice make it sound like something new.

From the linked articles:

But whatever. It's not happening in the Bakken.

I don't have the statistical analysis, but I have the anecdotal evidence to make that statement. But Whiting does. Exhibit A:

I don't know the Permian at all. I follow it a little bit and have noted a few things. Most important(ly): it appears unconventional / shale basins are not all alike.

I am inappropriately exuberant about the Bakken, so everything that follows, take with a grain of salt. This is my worldview of the Bakken vs other shale plays, particularly the Eagle Ford and the Permian.

First, I think the Bakken is still going to be the best of the three plays (Bakken, Permian, Eagle Ford) in these categories:
  • effect the Bakken will have on the state economy compared to that of the Permian/Eagle Ford and the Texas economy
  • the amount of money that will be returned to mom-and-pop mineral owners in North Dakota on a per capita basis compared to those in Texas
  • crude oil production per well
Now, with regard to the linked articles above, that "child" wells are a challenge in the Permian. It appears to be quite the opposite in the North Dakota Bakken (I can't speak to the Bakken in Montana and/or Saskatchewan).

It certainly appears the operators have figured out the "Goldilocks" density, although even that will change / improve over time.

It appears that in Tier 1, middle Bakken, six wells in 1280-acre spacing will be the norm.

It appears that in Tier 1, first bench Three Forks, six wells in 1280-acre spacing will also be the norm.

All other tiers and all other Bakken formations, the jury is still out.

To see examples of well density in the Bakken, click on the follow tags:
Years ago I noticed the positive impact that "child" wells had on their parents and on their sibs. I have blogged about that often. An analyst / research student working for Halliburton telephoned me years ago to discuss this with me (he called me; I didn't call him).

I devoted an entire site to these "wells of interest." At the index to that site, one can see all the examples of the positive impact of "child" wells. I think at one time they were called "daughter" wells, but I don't recall for sure. The list of wells has gotten so long, I've pretty much quit doing that. Whether I've "proved" the point or not to others bothers me not at all. I believe what I see.

The Bakken is a bit easier about which to generalize. For the most part, when we talking about the Bakken now (2014 - 2018) we are talking about one formation, about 20 to 40 feet thick, pretty much being fracked about the same by all operators.

I have no clue about the Permian but it's my understanding the unconventional target formations in the Permian are many and they are thick. So, when I see a Bloomberg article with so much generalization it makes me wonder. If I were following the Permian or interested in the Permian I would want to know a lot more specifics.

They used to talk about the Bakken development being like a baseball game and early on we were only in the first inning. No one makes that analogy any more but I would guess we might be in the third inning.

The Permian? Easily the first inning, maybe the bottom of the first inning. But that's it. Based on what little I know about the Permian it sounds like there is a lot to learn. My hunch is that the operators have gone after the absolutely easiest stuff to lift.

Oh, a random note: in the Bloomberg article they talked about "dry" wells in the Permian. That's interesting. Hitting a dry well in the Permian has to be concerning. There are no "dry" wells in the Bakken. We've talked about that before. Yes, some wells are reported as "dry" but that's because of a failure of the well itself, usually a failure in the cementing / casing process. But if the well is completed in the Bakken it will strike oil.

It may not be an "economic" well but we've discussed that also. But it won't be dry.

I have yet to see more than a handful of recent middle Bakken wells abandoned due to low oil production.


  1. Basic concept, not news. Poorly explained (some mistakes).

    Also, despite the shift to closer spacing, we are still not seeing a dropoff in performance. Obviously there must be other aspects that are improving and the net result is OK, on average.

    1. Comment moved to the body of the post. Thank you for taking time to comment. Much appreciated.