Saudi Watch -- August 20, 2021

Link here. Saudi domestic crude use was at 586K bopd day in June, vs 452K bopd in May, 2021. Yawn. It's right in Saudi's mid-range. A tweet but not a story. 

Link here. Saudi crude oil exports at 5.965 million in June, vs 5.649 million bopd in May, 2021. Yawn. Pretty much unchanged, but compared to past years, current exports are hitting five year lows. Saudi's "normal" export range is 7.0 to 8.0 million bopd. Right now: running around 6 million bopd.

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Saudi Watches The Bakken

Disclaimer:

• I did this quickly.
• There will be typographical and content errors.
• I often mis-read things.
• I am quick to defend the Bakken.
• I am inappropriately exuberant about the Bakken (not as an investment opportunity but as an oil play, if that makes sense).
• I enjoy trying to connect dots and trying to match data points with human behavior.
  

Saudi's 2019 Bakken Assessment (a pdf will download) (linked at the sidebar at the right)

 

See this post for background. 

This was the summary but there was much, much more information in the study:

According to our records, more than 90% of the [horizontal Bakken] wells completed after 2017 are located in the core areas only. 

Operators have learned to drill only the best parts of the Williston Basin and avoid the less mature noncore areas. 

However, after calculating the infill potentials of all areas, we predict that by 2021 there will be no well locations left for future drilling in the core areas. 

Assuming a constant current drilling rate of 120 wells per month, the total field oil rate in the Bakken will reach record level of about 1.6 million bbl/d in 2021. [Montana + North Dakota].

Without further drilling, production will decline by one-half within a year. 

Later, operators will be forced to drill in the less productive, high watercut noncore areas along the edges of the Williston Basin. Our findings suggest that policy-makers should beware of assuming that the shale oil boom in the Bakken will last for several decades longer. We recommend that operators not focus only on increasing the initial oil rate. Maintaining reservoir pressure above the bubble point by preventing over-drilling is key to increasing ultimate oil recovery.

The writers are correct: the shale boom in the Bakken is over.  The Bakken is in the "manufacturing stage" and has been in the "manufacturing stage" since about 2016, perhaps even earlier. In my mind, the Bakken boom in North Dakota ran from 2007 to about 2012. This has been addressed often. 

Let's see, this study was based on, according to the authors, an existing 14,678 Bakken wells as of sometime in 2019.

Let's assume, 14,678, as of December 31, 2018.

From 1 January, 2019, to 31 December 2021:

• at a rate of 120 new wells/month =
• 120 x 12 x 3 = 4,320 more wells
  

The authors of that Saudi study said their study was based on 14,678 Bakken horizontal wells. Their paper was published in 2019. Their study included Montana. The delta between the NDIC numbers below and the Saudi numbers must have been due to the Bakken wells in Montana. There may have been a few Bakken wells in Canada but the maps in the published study did not show any that I could see.

The NDIC data shows the number of "Bakken" wells:

• December 31, 2018: 12,817
• June 30, 2021: 14.521

• 14521 - 12817 = 1,704 wells

• 1704 / 30 months = 60 wells / month
  

Montana,

• January 1, 2019: Bakken wells in North Dakota: 13,485
• the Saudi study: 14,678 Bakken wells
• delta = Montana Bakken wells in January, 2019: 1,193 wells

On another note, from the Saudi study:

In order to calculate infill potentials, one should first determine well density. 

However, the publicly available data rarely provide information about the bottom hole locations of the wells. Instead, only surface locations are reported as latitude-longitude coordinates.

In fact, that is absolutely incorrect. The NDIC posts the exact location of every bottom hole in every well drilled in North Dakota. 

In addition, NDIC reports surface locations, not only as lat-long coordinates but also number of feet from each section line.

But even without that data, based on surface hole location, the name of the well, the drilling units, etc., etc, one can "guess" the bottom hole location 95% (?) of the time.

Be that as it may, the Saudis in this study estimated that at the drilling rate in 2019, there would be no more drilling locations in the Bakken by the end of 2021. 

In July, 2019, the price of WTI was trading in the low $60's and crashed to $22 by March, 2020. Link here.  

One wonders what policy makers in Saudi Arabia were thinking in early 2020. They would have been very aware of the Bakken study.