Proved Reserves of US Oil in 2010 Rose By Highest Amounts Since Recording Began in 1977

Before The Permian Re-Surgence

Updates

August 5, 2012: a couple days after writing the note below, it was interesting to read EOG's comments about the Bakken (supporting what I wrote below): other than the Bakken and the Eagle Ford, all other North American "plays" are either inconsequential or NGL plays.

Original Post

While going through the top stories for the past week, I had to chuckle (again) recalling all those stories back in 2007, 2008, 2009, etc., by almost everyone, including Snopes.com, suggesting that stories coming out of the Bakken were just a bit of hype.

As a reminder, from an earlier post this week:

Earlier this week, August 1, 2012, the EIA published its annual summary of proved crude oil and natural gas reserves in the United States as of December 31, 2010.

Proved reserves of U.S. oil and natural gas in 2010 rose by the highest amounts ever recorded since the U.S. Energy Information Administration (EIA) began publishing proved reserves estimates in 1977.

Net additions to proved reserves of crude oil plus lease condensate in 2010 totaled 2.9 billion barrels, surpassing the previous high of 1.8 billion barrels added in 2009 by 63 percent.

Again, to repeat in case anyone missed it: Proved reserves of U.S. oil and natural gas in 2010 rose by the highest amounts ever recorded since the U.S. Energy Information Administration (EIA) began publishing proved reserves estimates in 1977.

North Dakota reported the second largest increase, 829 million barrels (78 percent), driven by development activity in the Williston Basin [the Bakken]. Collectively, North Dakota and Texas accounted for nearly 60 percent of the net increase in total U.S. proved reserves in 2010.

An honest reading of the EIA report will confirm that the Bakken was not hyped. To its credit, Snopes.com was a bit more circumspect in its analyis of the "Bakken story" -- suggesting, perhaps, that the "jury was still out."

Anyway, for what it's worth, that was the EIA report, for those who might have missed it the first time.

Bakken, OXY, Monterey Shale: The Dots Are Starting To Connect

Updates

April 20, 2021: see this post --

The Miocene: I had seen this story earlier but it didn't interest me enough to post it. Then a reader sent it to me this morning and I saw something in the article I had not seen before. The BP discovery in the Gulf of Mexico is in a very "recent" geologic reservoir, the Miocene. How recent: it was during the Miocene that apes and humans were diverging. 

It is generally agreed that the taproot of the human family shrub is to be found among apelike species of the middle Miocene epoch, roughly 15 mya or the late Miodene epoch, roughly 10 mya. -- Britannica.

Links to come back to when I have time:

• Mad Dog field -- see this post at the blog, April 19, 2013;
• the Miocene Monterey formation, GEO Ex Pro, 2013;
• the Monterey Formation, wiki;

February 20, 2017: Monterey County voters overwhelmingly voted to ban fracking in their county. If I recall correctly, there's very little drillingin Monterey County to begin with; this is not a big story. And the fact that USGS has knocked off 96% of reserves. See April 30, 2015, RBN Energy link below.  

September 20, 2015: Business Insider calls it a scam. 

June 17, 2015: hope springs eternal. 

April 30, 2015: incredibly good update, RBN Energy. 

January 25, 2015: hope springs eternal. The San Jose Mercury News is reporting:

The oil and gas potential of the vast Monterey shale formation will be the focus of an upcoming study by an independent panel of scientists operating under direction of the state Legislature.

The study will be part of a highly anticipated report on the controversial practice of hydraulic fracturing, with the first volume released last week. That report, covering existing well-stimulation practices, underscored the profound uncertainties about the amount of developable oil beneath Monterey County and parts south.

"We're going to look at what it would really take to get a good estimate," said Jane Long, who is spearheading the study for the California Council on Science and Technology.
The effort is one result of SB 4, a 2013 state bill that was the Legislature's answer to a raging debate about the impacts of hydraulic fracking in California. Santa Cruz County banned fracking, and in November, San Benito County voters did the same.

The Monterey shale underlies the San Joaquin Valley and parts of Monterey County. In 2011, the U.S. Energy Information Administration estimated it held 15.4 billion barrels of untapped oil -- more than any place in the U.S.

But in 2014, the agency dramatically lowered its estimate to 600,000 million barrels. The study found both estimates to be unreliable.

Say what? They found "both estimates to be unreliable."

Jerry Brown needs the money for his bullet train. 

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January 14, 2015: the slump in the price of oil spells the end for the Monterey Shale ... like forever?

October 2, 2014: OXY USA to spin off California Resources (aka Monterey Shale). 

May 23, 2014: the potential of the Monterey Shale is "taken off the table" by the Feds.

May 21, 2014: from NaturalGasIntel --

The Energy Information Administration (EIA) has cut its estimate of recoverable oil in California's Monterey Shale to 600 million bbl, a 96% decrease from previous estimates, an agency spokesman told NGI's Shale Daily Wednesday.

The revised number comes nearly three years after EIA had estimated Lower 48 technically recoverable shale oil resources at 23.9 billion bbl, including 15.4 billion bbl in the Monterey/Santos play, then believed to be the nation's largest shale oil formation (see Shale Daily, July 11, 2011). A year later, in its Annual Energy Outlook 2013 (AEO2013), the agency estimated technically recoverable oil in the Monterey at 13.7 billion bbl (see Shale Daily, July 24, 2012).

But changes to technically recoverable resources (TRR) estimates "do not necessarily have significant implications for projected oil and natural gas production, which are heavily influenced by economic considerations that do not enter into the estimation of TRR," an EIA spokesman told NGI.

"Importantly, projected oil production from the Monterey play is not a material part of the U.S. oil production outlook in either AEO2013 or AEO2014, and was largely unaffected by the change in TRR estimates between the 2013 and 2014 editions of the AEO," Jonathan Cogan said. "EIA estimates U.S. total crude oil production averaged 8.3 million b/d in April 2014.

“In the Annual Energy Outlook 2014 (AEO2014) Reference case, production of economically recoverable oil from the Monterey averaged 57,000 b/d between 2010 and 2040, and in the AEO2013 the same production averaged 14,000 b/d. Clearly, there is not a proportional relationship between TRR and production estimates -- economics matters, and the Monterey play faced significant economic challenges regardless of the TRR estimate."

Estimates of TRR "are highly uncertain," Cogan said.

Key factors driving the lower estimate included new geology information from a U.S. Geological Survey review of the Monterey "and a lack of production growth relative to other shale plays like the Bakken and Eagle Ford."

The TRR estimates and other assumptions in AEO2014 are due to be released by EIA in June.

Except for a footnote, the EIA never mentions the Monterey Shale in the AEO2014. Very, very strange.

May 20, 2014: The Los Angeles Times carries the story that the Monterey Shale is a "bust"-- EIA.

February 14, 2014: OXY to move headquarters from Los Angeles to Houston, spin off California assets.

September 23, 2013: update on the Monterey Shale in The Wall Street Journal.


September 20, 2013: Governor Jerry Brown signs fracking regulations for the first time ever in the state of California.

June 29, 2013: The Dickinson Press has a nice little story on the Monterey. 

June 3, 2013: water issues / fracking issues in the Monterey. 

April 1, 2013: Taft, California, hopes to cash in on Monterey. Update at LA Times. Doesn't sound promising. I don't think oil companies have cracked the code on fracking in the Monterey, and the environmentalists are circling. The Monterey is California's Keystone XL.

February 21, 2013:  short video on Monterey Shale; sounds like it will be more difficult to figure out geologically (think tectonic plates, fault lines, mountains, earthquakes); CVX is on record as saying they are not impressed. Remember earlier post of CVX moving some 800 of their California employees to Houston. The transcript of the video is here.

February 3, 2013: New York Times article on the Monterey Shale in California.

December 24, 2012: recent BLM auction in Monterey County turns out to be a dud: $10/acre.

December 23, 2012: BLM approves leasing for the Monterey shale; says fracking is safe; 

August 29, 2012: with Californians so anti-oil, not much chance that the Monterey Shale will be huge competitor to the Bakken with regard to bragging rights. It's not as easy as it sounds to drill the Monterey Shale.

August 5, 2012: after posting the story below, and after posting the first couple of comments, I read the SeekingAlpha.com transcript of EOG's 2Q12 earnings conference call. What EOG had to say about Eagle Ford, the Bakken, and the Monterey, confirms what I wrote below. Very, very interesting.



California Dreamin', The Mamas and The Papas

Original Post

Huge "tip of the hat" to Bakkenzone.com for this story: Monterey Shale may not match the Bakken.

Regular readers should find this very, very interesting.

First, some data points from the blog over the past few weeks.

Occidental, in my mind, is as California-centric, as Whiting is Bakken-centric. (I could be wrong, but in general, that's my world view.)

Occidental entered the Bakken; initials wells were not particularly noteworthy, and OXY mentioned (in an earnings conference call) they would be reducing their effort in North Dakota and moving to California where they perceived better opportunities.

About this time, there was a flurry of articles about the Monterey Shale in California, and the dots started to connect.

But, then two interesting observations. First, after that initial flurry of stories, I didn't read much more about OXY and Monterey Shale. Perhaps I wasn't looking hard enough (true), but I scan the headlines of four or five oil and gas trade journals five days a week, and I don't recall much being written about Monterey Shale.

The second observation; in the 2Q12 earnings conference call, OXY mentioned that its worldwide production had increased, but that increase was mostly attributable to the Bakken. And unlike earlier conference calls when the Bakken was hardly mentioned, it seems the Bakken was mentioned fairly often this time around. Those two observations suggested to me that maybe, just maybe, perhaps the Bakken was looking at least a little bit better to OXY.

So, that's where matters stood in the left side of my brain until a few minutes ago. I was checking up on Bakkenzone.com as a Bakken news site, and came across the linked story (above). From that site:

The field, a formation of rock known as the Monterey Shale, was thought to have 15 billion barrels of “technically recoverable” reserves, according to government estimates. That’s triple the amount of oil found in huge and newly prolific fields in North Dakota and Texas. The formation lies under the San Joaquin Valley in central California. Most of the locations probed so far have been northwest of Bakersfield.

But drillers haven’t been able to get the Monterey Shale to produce oil at high rates. Brackett suggests that there are a few characteristics of the geology that could make the field more difficult to develop. There are lots of natural faults in the rock, which means drillers can’t easily control the flow of oil through faults they create. Also, the rock is not under enormous pressure, so there is less force pushing the oil to the surface. And the oil may be relatively thick and sticky, which slows its flow.

Interesting, huh?

Now, add a few more data points.

"Everyone" agrees that the Bakken should have 3 to 4 billion barrels of recoverable oil. This is a most conservative estimate and was "developed" back in 2008 (?). Certainly technology and geopolitical events have changed since 2008. Recent estimates, by some credible folks, suggest there may be as much as 24 billion barrels of recoverable oil in the Bakken/Three Forks. Note how those numbers (4 billion and 24 billion) compare to the estimate for Monterey Shale.

Also, note at the linked story, the drillers interested in the Monterey Shale: Occidental Petroleum Corp.(mkt cap: $75B), Plains Exploration & Production Co. ($5B), Venoco Inc. ($0.5B) and Berry Petroleum Co ($2B). That list speaks volumes, especially when compared to the list of drillers interested in the Bakken: Statoil (Norway State Oil), XOM, COP, Marathon, Whiting, Continental Resources, Burlington Resources.

I don't think the state of California will stand in the way of developing the Monterey Shale due to the state's budget crisis, but a) faux environmentalists will always be a challenge; b) I've never thought of California as pro-business as North Dakota; c) even under best of circumstances, lawyers per capita in California vs North Dakota is a concern; and, d) if anything goes wrong, environmentally while drilling the Monterey, the press will be ready to pounce.

The tone of OXY's 2Q12 conference call seems to reflect those data points, especially in light of the article linked above, Bloomberg, July 31, 2012.

24 Billion Bbls of Recoverable Oil; EIA Estimate of US Crude Oil Proved Reserves: 25 Billion Bbls

I have a new tag / label at the bottom of the blog, "24billion" to find those posts in which "24 billion bbls of recoverable oil in the Bakken/Three Forks" has been mentioned or referenced.

For newbies, you may want to read some of those posts before reading further. Bottom line: "official" estimates for likely recoverable oil in the Bakken/Three Forks is about 3 - 4 billion bbls. Some folks now suggest 24 billion bbls of oil is recoverable from the Bakken. (That number can be arrived at with very little math using the original Leigh Price paper. You can do that at home with paper and pencil.)

That "24 billion bbls" is a very interesting number.

Earlier this week, August 1, 2012, the EIA published its annual summary of proved crude oil and natural gas reserves in the United States as of December 31, 2010.

Proved reserves of U.S. oil and natural gas in 2010 rose by the highest amounts ever recorded since the U.S. Energy Information Administration (EIA) began publishing proved reserves estimates in 1977.

Net additions to proved reserves of crude oil plus lease condensate in 2010 totaled 2.9 billion barrels, surpassing the previous high of 1.8 billion barrels added in 2009 by 63 percent.

Crude oil plus lease condensate reserves at end of December, 2010: 25.2 billion bbls. 

Proved reserves of crude oil and lease condensate rose 13 percent to 25.2 billion barrels in 2010, marking the largest annual increase since 1977 and the highest total level since 1991. Proved reserves increased in each of the five largest crude oil and lease condensate areas (Texas, the Gulf of Mexico Federal Offshore, Alaska, California, and North Dakota) between 2009 and 2010. Of these, Texas had the largest increase, 860 million barrels (16 percent), resulting mostly from ongoing development in the Permian and Western Gulf Basins in the western and south-central portions of the state. North Dakota reported the second largest increase, 829 million barrels (78 percent), driven by development activity in the Williston Basin. Collectively, North Dakota and Texas accounted for nearly 60 percent of the net increase in total U.S. proved reserves in 2010.

We are comparing apples to oranges at this point, but very interesting data points: the EIA says the entire US has 25.2 billion bbls proved reserves of crude oil plus lease condensate. Some say the Bakken/Three Forks holds 24 billion bbls of recoverable oil.

Regardless of the numbers, the narrative is very, very interesting. Remember, that was 2010: the Bakken was going strong, but 2011 was an even bigger year.

900 vs 300

Three data points below the breaks:

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1. 2008: The State of North Dakota estimated in 2008 that the Bakken Formation contains 149.2 billion barrels of oil in-place (OOIP) within the borders of North Dakota. (Don't you just love that "point.two"? It makes the number look much more believable than if it were 150 billion bbls, but I digress.) [Update: that link is broken, but it helps me date this presentation. This NDIC presentation must have been in 2008 because slide 30 shows 149.2 billion bbls of oil OOIP in the middle Bakken. I don't want to lose presentation, so I have archived it.]

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2. I vaguely recall that early on in the Bakken boom "they" said one could expect about 3 - 4 percent recovery of OOIP.  Four percent of 150 billion --> 6 billion.  In fact, from various conference calls, it appears "they" are recovering eight percent (eight percent of 150 billion --> 12 billion). Harold Hamm has said for quite some time that 24 billion is likely to be recovered. Eight percent of "what" --> 24 billion?  300 billion. So, I've always thought Bakken OOIP was around 300 billion barrels.

********************

3. From an earlier post this year (February 23, 2012:

From wiki:

A research paper by USGS geochemist Leigh Price in 1999 estimated the total amount of oil contained in the Bakken shale ranged from 271 billion to 503 billion barrels, with a mean of 413 billion barrels  -- original oil in place (OOIP).  (200,000 square miles) 

With the deeper benches in the Three Forks formation, CLR says there could be 900 billion barrels of OOIP in the Bakken Pool.

Simply incredible.

Also from wiki:

Ghawar is an oil field located in Al-Ahsa Governorate, Saudi Arabia. Measuring 280 by 30 km (170 by 19 mi), it is by far the largest conventional oil field in the world. When appraised in the 1970s, the field was assessed to have 170 billion barrels of original oil in place (OOIP). (3,230 square miles)

********************  

So, those are the data points. A lot of folks have said Leigh Price's estimate of 270 to 500 billion bbls of original oil in place in the North Dakota Bakken was on the high side.

Harold Hamm consistently opines that he thinks there is 24 billion bbls of recoverable oil from the Bakken. Eight percent recovery is certainly on the high side but there is more and more evidence that we are seeing at least eight percent recovery by the better Bakken drillers. Again 8% of what = 24? 300 billion barrels.

So: 300 billion bbls OOIP seems to be "the number."

But note: CLR above suggested that with the deeper benches of Three Forks, the OOIP might be as much as 900 billion barrels of oil (or three times as much as 300 billion barrels).

A SeekingAlpha.com article today reminds us that CLR thinks the new number is 900 billion bbls. That was in the 4Q11 conference call.

So, is CLR putting its money where its mouth is? From the linked article:

When asked about where they will spend their $550 million CapEx increase, Hume responded "it's all entirely going to the Bakken." (They produce in the Niobrara/DJ Basin, the Anadarko Woodford and the Bakken.) He added, "we're obviously participating in all the acreage sales in our key plays, mainly the Bakken. Right now, we're very concentrated, very focused on consolidating acreage in the Bakken."

No Longer Stumped -- The Pronghorn Sand / Whiting's Pronghorn Prospect -- The Bakken, North Dakota, USA

Background

From the ND DMR monthly publication:

Whiting Petroleum drilled 217 oil wells in Billings and Stark counties targeting the Pronghorn Member of the Bakken Formation from 2010-2014.

In their own words, they drilled these wells and pursued this oil play based upon their work in the Wilson M. Laird Core and Sample Library.

As of November 2014, these wells had produced 19,542,147 barrels of oil. Using just the oil extraction tax and a conservative price of $40/ barrel, Whiting’s Pronghorn oil play has generated more than $50,800,000. That is more than three times the $13.6 million core library expansion.

In November 2014, Whiting Petroleum’s 217 Pronghorn oil wells produced 558,412 barrels or 18,613 barrels per day. These wells generated $48,400 in extraction taxes per day (at $40 per barrel). At that rate, the extraction tax pays off the Wilson M. Laird Core and Sample Library expansion project in 280 days. 

Stratigraphic 

From an OXY USA report in the Manning oil field, general area of Whiting's Pronghorn prospect:

Updates

August 13, 2015: the Pronghorn Federal wells are tracked here.

August 8, 2012:

• 20079, 2,760, Whiting, Obrigewitch 21-16TFH, Bell, t2/12; cum 117K 6/12; 

June 5, 2012: this is what I wrote in reply to a comment elsewhere:

1. For others who are following this discussion, the presentation referenced above is found at this site: https://www.dmr.nd.gov/ndgs/bakken/bakkenthree.asp; presentation GI-136 at the link. 

2. Remember, I am an amateur at all this. The third map over, on the linked presentation above, certainly seems relevant to the area under discussion.

3. I think this is developing faster than even Whiting expected. Remember, the Pronghorn Prospect was carved out of the Lewis&Clark. In Whiting's most recent corporate presentation (which I linked today), this is the first time that Whiting has publicly separated the Lewis&Clark from the Pronghorn Prospect on their corporate presentation.

4. I agree with you; the proposed pipeline (south of the interstate) suggests Whiting is looking a lot farther south than first suggested (and I posted that thought earlier today).

5. I have listed the oil fields that I think are in the Whiting Pronghorn Prospect, and have asked for help in clarifying; to date no one has contradicted what I've posted. The post is here: http://milliondollarway.blogspot.com/2012/05/reminder-ndic-oil-fields-inside.html

6. Whiting will help us out with this. They are designating their wells that are targeting the Pronghorn Sand with a "PH" designation.

7. Right now, I consider any Whiting well twelve miles north or twelve miles south of the area between Dickinson/Belfield (and inclusive) as part of their Pronghorn Prospect unless evidence to the contrary.

8. In Whiting's current corporate presentation, the first one in which they separate the Pronghorn from the L&C (http://milliondollarway.blogspot.com/2010/10/areas-of-interest-in-bakken-by-producer.html):

• Sanish/Parshall: 83,000 net acres for Whiting
• Pronghorn Prospect: 121,402 net acres for Whiting
• Lewis & Clark Prospect: 128,370 net acres for Whiting

May 28, 2012: see first comment on naming the Pronghorn formation.

May 24, 2012: Prior to the Bismarck Bakken conference, CLR estimated 24 billion bbls recoverable oil from the Bakken Pool (Bakken formations and Three Forks formations). On the last day of the conference, Harold Hamm said this: 

[CLR] now believes there is as much as 27 billion to 45 billion barrels of oil recoverable from the Bakken based on production from two previously untapped bench zones in the resource.

The article went on immediately to talk about the Pronghorn Sand, so was one of the "two previously untapped bench zones," the Pronghorn Sand? If so, what is the second zone he was talking about? The second bench of the Three Forks? Most likely.  I wonder if the "original" Three Forks wells are all considered "first bench" wells?

Sorting this out, I wonder if CLR suggested 24 billion bbls with original middle Bakken and Three Forks; raised it to 27 billion with the second bench; and then to 45 billion with the Pronghorn Sand. The delta would be approximately 18 billion for the Pronghorn Sand which seems reasonable (as a percent) based on the geographic size (surface area) of the Pronghorn Sand. But, it is way to early to guess based on the little public information. 

May 22, 2012: The Prospect Sand could be the best payzone in the Bakken -- Mike Filloon. 

May 10, 2012: Whiting's 1Q12 corporate presentation: 121,403 net acres in the Pronghorn prospect.

February 7, 2012, WLL's corporate presentation: in the Lewis & Clark: no Bakken; thin Pronghorn Sand; mostly Three Forks; Pronghorn prospect: thick Pronghorn -- 35 feet; no Bakken. 

November 25, 2011: I may be slow, but at least I eventually catch on. It just dawned on me. I could be wrong, but Whiting was perhaps one of the earliest to designate their Three Forks Sanish horizontals with the "TF" before the "H" yielding TFH.  With the "P" lettering preceding the "H" they obviously want to identify this formation.Technically, the "Pronghorn Sand"  is part of the upper Three Forks and the company could have simply stayed with the TFH designation . Separating this out, suggests to me the CEO feels strongly that the Pronghorn Sand will be different enough from the TF that it required its unique designation. The question, now, is whether CLR will differentiate the four (4) benches on the "bottom" side of the Three Forks formation.

See comment from Mary -- my hunch that it stood for "Pronghorn" was correct, but I was sure on shaky ground on that. It's very interesting that they would put "prospect" designations there. A big thank you to Mary for researching this and posting it. 

Pronghorn Well Completions

May 10, 2012: More Pronghorn results here.
 
From the slides: Pronghorn 4Q11 Completions, in BOEPD

• 20131, 1,645, Pronghorn Federal 34-11TFH, Park oil field;
• 20404, 1,849, Pronghorn Federal 21-14TFH, Park oil field;
• 20124, 889, Brueni 21-16TFH, New Hradec;
• 20893, 3,218, Mastel 41-18TFH, Bell;
• 21483, 2,694, Marsh 21-16TFH-R, Dutch Henry Butte,
• 21018, 1,740, Obrigewitch 11-17TFH, Bell
• 20504, 3,225, Pronghorn Federal 21-13TFH, Park
• Pronghorn average: 2,184

Pronghorn Sand/Bakken Formation

Note: all references to the Pronghorn Sand as being part of the Three Forks formation should be updated; it was correct when it was first blogged. However, in its February 7, 2012, presentation, Whiting said that the Pronghorn Sand is part of the Bakken formation. 

Sometime in 2011, Whiting started referring to a new prospect as the Pronghorn prospect, a bit southeast of their Lewis & Clark prospect in southwestern North Dakota. Over time, a bit more information trickled out, and now, based on a recent Whiting corporate presentation, it appears there is a new formation at least in some parts of the Bakken: the Pronghorn Sand, an upper formation which is just below the Bakken. See slide 16 of Whiting's November, 2011, presentation (unfortunately those presentations will change over time, and this slide may be "lost").

The Pronghorn Sand is thick and prospective in three Whiting areas: a) Pronghorn Prospect; b) Big Stick in the Lewis & Clark Prospect; O'Neil Creek in the Lewis & Clark Prospect; and, c) the Elkhorn Ranch area of the Lewis & Clark Prospect.

The graphic reveals that in Whiting's Tarpon prospect there is the well-understood middle Bakken, lower Bakken, and Three Forks formations. Whiting is presently drilling into both the middle Bakken and the Three Forks in their Tarpon prospect. [Note: Whiting is drilling into B Zone of the middle Bakken in the Sanish; the C Zone of the middle Bakken in prospects south of the Sanish; and into the Pronghorn Sands farther southwest.]

In their Lewis & Clark prospect, the middle Bakken thins out to be almost negligible, but the Three Forks remains fairly thick (about the same as elsewhere in the Williston Basin). Interestingly enough, the Pronghorn Sands just begins to show up in the Lewis & Clark, and although not very thick, is thick enough to be drilled.

In the Pronghorn prospect, the middle Bakken becomes very thin. The Three Forks remains the same, but here the Pronghorn Sand is very thick and the target for Whiting drilling.

These are the oil fields inside Whiting's Pronghorn Prospect (my best guess; will be updated as new information flows), but consider the area between Dickinson and Belfield, especially north of the interstate as the area of the Pronghorn Prospect:

Pronghorn Prospect, north of I-94, between Dickinson and Belfield

• Whiskey Joe -- nw of Park, Park west of Bell
• Bell -- north of Belfield
• Park -- east of Bell
• North Creek -- between Bell and New Hradec
• New Hradec -- east of Bell, ne of Zenith
• Dutch Henry Butte -- east of New Hradec
• Green River -- east of Belfield, north of Zenith, north of I-94; west of Dickinson

Pronghorn Prospect, south of I-94, west of Dickinson

• South Heart -- south of Dutch Henry Butte -- south of I-94; west of Dickinson
• Zenith -- south of Bell, east of Belfield; west of South Heart; south of I-94; west of Dickinson
• Gaylord -- south of Belfield; south of the interstate; west of Zenith
• Fryburg -- sw of  Belfield; west of Gaylord
• Davis Creek -- sw of Belfield; south of Fryburg; southwest of Gaylord oil field

Original Post

I'm usually not this stumped (I may not know what's going on, but at least I can make something up or come up with an idea) but in this case, I have absolutely no idea.

A reader sent me this:

Noticed Whiting well Kubas 34-12PH on the drilling list as the next location after SOLBERG 34-12TFH. They seem to be at the same location. I haven't seen the PH designation before. Any idea what it means? 

It's not a typo. Permit number 21895 in the Bell oil field is named the Kubas 34-12PH. I can't believe the "P" stands for "Pronghorn" prospect, but that's all I can think of. The only formations in this area: Bakken, Three Forks, Lodgepole, and Tyler.

So, if anyone knows what the "P" stands for there are at least two folks who would be interested.

24 Billion Barrels -- Collaborating Support? -- Bakken, North Dakota, USA

Updates

February 21, 2011: Drilling up to seven (7) wells in one section, one 640-acre unit spacing.

Original Post

It's a slow day for me; I did not get called in to teach today.  When I have time on my hands, I tend to ramble. Rational individuals may do well to skip this post.

This goes back to Harold Hamm's position that there is/are 24 billion barrels of recoverable oil in the Bakken and Three Forks formation.

A comment just sent to me from a reader spurred this post. In addition, here's another comment from another who has first-hand experience with CLR's performance (when you get to that link, scroll down to "57seeker," posting January 28, 2011, 2:00 a.m.)

For those interested, this is the link to Dr Leigh Price's original paper that "predicted" the Bakken:
http://www.undeerc.org/price/TextVersion.pdf  or click here. (Same links.)

Go to page 238 of that text: it is there that you will find that Dr Price stated that he estimated 413 billion barrels of original oil in place in the Bakken. (Dr Price provides an excellent argument for this number earlier in the text. In fact, for investors, on a "down day" in the market, I recommend you re-read the Price article; it will cheer you up.)

At the time of the 2008 USGS assessment of the Bakken, it was generally agreed that technology (then) could result in recovering two to three percent of the original oil in place (OOIP). I noted early on that it appeared, using different figures, but publicly accepted figures, that companies like CLR might already be recovering six to eight percent of OOIP.

The anonymous reader suggested taking the 24 billion barrels of recoverable oil that Harold Hamm opines and dividing that by Dr Price's estimate of OOIP, 413 billion barrels. Result: 6 percent.

How interesting. Six percent. Exactly what some companies argue they are currently recovering from the Bakken, and not out of line. At the time of the 2008 survey, the two to three percent was estimated well before current technology. Correct me if I'm wrong, but back in 2008, the norm was short laterals with single-stage fracture stimulation. The norm is now long laterals with multiple-stage fracture stimulation, and probably with better mix of proppants.

Just for the fun of it (again this is a slow day for me which gives me a lot of time to play around with the figures), what does 24 billion barrels of oil mean?

Let's say North Dakota maxes out with a production rate of 750,000 bopd. How long would it take to exhaust 24 billion barrels, producing at 750,000 bopd? 32,000 days, or 88 years. That would guarantee life time employment for Harold Hamm's grandchildren.

How many years do the analysts now say that it will take to fully exhaust the Bakken? It is now generally accepted by academic analysts that active drilling will continue until about 2030 and production will peak sometime after than and then decline until about 2100. How many years is it until 2100? 90 years.

Hmmm. Harold Hamm's 24 billion barrels at 750,000 bopd and 88 years is almost identical to the academic analysts' 90 year estimate.

I started this commentary, as I do with most commentaries, not knowing where I will end up. If the commentary ends up being too insane, I delete it, no matter how much time I spent on it. For the life of me I did not expect to see two estimates (88 years vs 90 years) come out so close together.

Check my math. It's too coincidental.

Idle rambling.

Investor Day: CLR Presentation -- This Is Worth Studying

I post 3 to 5 stand-alone postings per day as well as sometimes a dozen updates of previous postings every day, as well as posting comments. 

Occasionally there are some very, very interesting postings, but this posting may be one of the most incredible I have ever posted. CLR is suggesting it may be sitting on as much as 3.0 billion recoverable barrels of oil equivalent in the North Dakota and Montana Bakken.


In addition, CLR is suggesting that there may be as much as 24 billion boe recoverable in the Bakken. It is hard to tell from the slides alone (without the audio or Q&A) but the slides as shown suggest CLR is separating the Bakken formation from the Three Forks formation. If so, this presentation is even more incredible.

Investor Day: CLR Presentation (slide presentation)

Continental Resources Investors Day 2010: "Drilling Down in the Anadarko Woodford"
October 12, 2010
Skirvin Hilton, Oklahoma City, OK

Slide 12:  (slide 12 of overview)
In addition to 130 million barrels of oil (boe) equivalent proved reserves at mid-2010:

• 2.3 billion boe in unbooked, unrisked reserve potential (= 7.5 x mid-2010 proved reserves)
• With 320-acre spacing in the Bakken, unbooked, unrisked reserve potential would total 3 billion boe

(Yesterday, before seeing this presentation, someone estimated CLR might be sitting on 3.6 billion recoverable boe, which I posted as "back-of-the-envelope" calculations; uncanny)




Wurlitzer Prize, Norah Jones, piano; Willie Nelson, strumming.


Slide 32 (slide one of the Bakken presentation)
CLR suggests there may be as much as 24 billion barrels of oil recoverable (=5 times 2008 USGS estimate) in the Bakken
More than 2,750 horizontal wells completed since January, 2000
Industry adding 1,800 wells/year