Locator: 49625B.
A new, AI-based analysis suggests that while Bakken crude oil production is humming along at a steady 1.2 MMb/d, about 75% of the shale play’s top-quartile locations have already been drilled and only 6,100 well sites — about six years of inventory at the current drilling pace — could generate a good return at the prices we’ve seen the past couple of years. That raises a long list of questions. Are the Bakken’s best days behind it? Which producers are well-positioned from a best-rock perspective, and which are less so? And what would happen if crude oil prices were to settle in below $60/bbl? In today’s RBN blog, we’ll discuss highlights from Novi Labs’ fresh take on the U.S.’s second-largest onshore production area.
Last year, in You Don’t Know Me, we recapped the Bakken’s extraordinary rise during the early years of the Shale Revolution. From 2009 to 2015, crude oil production in western North Dakota and the eastern edge of Montana increased 6X, to 1.2 MMb/d — a growth rate so outrageous that more than two-thirds of the oil produced there in 2013-14 needed to be loaded into tank cars and railed out. (Takeaway pipeline capacity didn’t catch up ’til 2017.) A mid-decade price crash trimmed Bakken production to less than 1 MMb/d, but by 2019 E&Ps had pushed the basin’s output to a record 1.4 MMb/d. Then came Covid, another price crash and another rebound — this time only to the 1.2-MMb/d level where production stands today.
As shown in Figure 1 below, the vast majority of Bakken crude production comes from four North Dakota counties: McKenzie (dark-blue layer), Williams (magenta layer), Dunn (red layer) and Mountrail (orange layer)