Another Graphic For Jane Nielsen -- August 19, 2015; Finally Bird Lovers Understand Wind Energy -- It Took Them Long Enough

The three major oily plays in the US: the Bakken, the Eagle Ford, and the Permian. In the long-term, it will be a race between the Bakken and the Permian for bragging rights. Conventional wisdom is that the Permian will get bragging rights.

In the near term, as prices for crude oil (WTI) start drifting into the $30-range, it will be the productivity/rig that will start to gain more attention. And, yes, the EIA, tracks that.

Here is the most recent data, released August 10, 2015. The next release is scheduled for September 14, 2015.

The EIA tracks the seven most important shale regions (only four of which are oily, and of those four, only three matter at the moment). The EIA notes: these seven regions accounted for 95% of domestic oil production growth and all domestic natural gas production growth during 2011-13.

In the graphic below, note the ovals in "green." Looking at the "green" ovals and comparing the oil production/well in the Permian against the Bakken speaks volumes. It explains why the recent New York Times article talked about the "demise" of the fracking industry in Texas rather than the Bakken (in the headline).

I would assume the day-rates for rigs would be similar in all regions, but that may not be true. The Bakken is heavily weighted with the brand new flex rigs that can "walk" to the next site while pad drilling. I do not know the extent to which operators are using these huge rigs and/or pad drilling in the Permian.

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Obama's Wind Farms, 504; Bald Eagles, 1

But it's an important first point.

In a WSJ op-ed, it was noted that "a California judge has ruled in favor of bald eagles and against 30-year permits to shred them."

Chalk one up for the bald eagle. The avian symbol of American freedom has beaten the Obama administration and the wind industry in court, though the majestic birds still don’t stand a chance when flying near the subsidy-fueled blades of green-energy production.

On Aug. 11, a federal judge in the Northern District of California shot down a rule proposed by the U.S. Fish and Wildlife Service (FWS) that would have allowed the wind industry to legally kill bald eagles and golden eagles for up to three decades.

The ruling is a setback for the wind industry and President Obama’s Clean Power Plan, which depends on tripling domestic wind-energy capacity to meet the plan’s projected cuts in carbon-dioxide emissions by 2030. The ruling also exposes the Obama administration’s cozy relationship with the wind industry and the danger to wildlife posed by a major expansion of wind-energy capacity.

U.S. District Judge Lucy H. Koh, an Obama appointee, ruled in favor of the plaintiff, the American Bird Conservancy, and against the FWS’s “eagle take” rule. Judge Koh found that the FWS violated the National Environmental Policy Act in 2013 when the agency’s director, Dan Ashe, decided that the agency could issue permits to wind-energy companies that would have allowed them to lawfully kill eagles for up to 30 years without first doing an environmental-impact assessment. Permits were previously limited to five years.

The tide is beginning to turn. I hope North Dakota legislators are paying attention. We know Iowa (and Texas) no longer care.

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A Note For The Granddaughters

I "came to" the Grand Canyon late in life. However, after driving cross-country multiple times from Texas to southern California over the past fifteen years, I have finally gotten the "bug" for the southwest, New Mexico, Arizona, Route 66, the Grand Canyon and associated parks in the region.

I would argue that one of the best books describing the development the southwest after the Civil War is Stephen Fried's Appetite for America.

Railroad buffs might enjoy the book, especially those folks with a "broad" interest in railroads.

I am so excited about what I've read in the book, I am planning on an extensive cross-country trip next summer to the Santa Fe / Taos (New Mexico) area with a side-trip to Pueblo, Colorado.

Putting The Most Recently North Dakota Crude Oil Production Decline Into Perspective -- March 15, 2015

Motley Fool headline yesterday:

And So it Begins: North Dakota Oil Output Slides 3.3% as Oil Plunge Takes a Toll.

I did not read the article. But the headline caught my attention. The 3.3% decline in oil production in North Dakota refers to the production in January, 2015, compared to the production the previous month, December, 2014.

As noted, I did not read the article. I assume Motley Fool provided a good historical perspective.

I am sure that the Fool noted that production is always tough in the month of January (and all winter months) in North Dakota.

I am sure that the Fool noted that as production increases, it becomes more and more logistically difficult to increase production on a percent basis -- due to any number of factors. In fact, folks have been surprised that the Bakken boom -- increase in production month-over-month -- has lasted as long as it has.

I am sure that the Fool noted that in addition to the slump in oil prices, Bakken producers were facing state-mandated obstacles: a) conditioning Bakken crude oil before shipping by rail; and, b) flaring restrictions. Both can significantly affect production.

I was most curious how the January, 2015, production delta (on a percentage basis) compared to previous Januaries.

Generally speaking, one could expect a 3 - 5% increase in North Dakota oil production month-over-month in the early boom. But winters are difficult for the operators in the Bakken. Last January (2014), the month-over-month production increase was just over 1% compared to almost 4% the following May (2014). Again, considering that we are well over a million bopd, a 4% increase in production is --- well, it catches my attention.

These were the numbers early last year:

But what was the production in January, 2013, and January, 2012, when it was much easier to hit new production records?

Folks may remember that I was trying to predict when North Dakota production would go over 1 million bopd (by the way, of all non-advertising-supported blogs and news outlets, I was the first to predict the correct month, when North Dakota would go over the 1 million bopd milestone). I would provide the data and then put in my own estimate ("E") for the next 12 months. Once the data came in, I changed the "E" to actual results ("A").

These were the actual production numbers and increases/decreases in production in the months of January, 2012, and January, 2013:

Look at January, 2013 -- a decrease of over 4%. No slump in the price of oil, no state-mandated obstacles, and production month-over-month decreased by an astounding 4% when in good months production could increase by 6%.

January, 2012, did show a 2% rise in production. However, that was a paltry increase compared to the 4.8% rise in production the previous month (December, 2011).

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Bottom line: all indications are that we will see significant declines in production going forward. However, the 3% decline in the most recent reporting month (January, 2015) is in line with previous Januaries.

November, December, January, February are tough months in the Bakken.

What amazes me is that January, 2015, was not significantly worse. January, 2015,was in-line with previous Januaries in a "qualitative" sense despite all the headwinds -- rigs being stacked; operators choking back on production due to oil rices; state rules on conditioning oil to be shipped by rail; and, strict state flaring rules.

What also amazes me is I have been posting the Director's Cut for several years now. When I first started blogging I didn't even know what the "Director's Cut" was, and furthermore, I didn't even realize how important they would become for a historical record.

A Month Ago, EIA Predicted US Crude Oil Output To Slow To 800K In 2015; Now, One Month Later, EIA Predicts The Growth To Be 1 Million BOPD

This is for Jane Nielson:

Rigzone is reporting:

The U.S. government on Tuesday jacked up its forecast for oil production next year by 250,000 barrels per day (bpd) as the boom in shale oil drilling continues to confound expectations of slower growth.

The U.S. Energy Information Administration now expects domestic output to rise to 9.53 million bpd, growing by around 1 million bpd for a third consecutive year, according to its latest monthly short-term energy outlook. A month ago the EIA had predicted output growth would slow in 2015 to 800,000 bpd.

The U.S. shale boom has allowed producers to unlock thousands of barrels of reserves, putting the United States on course to become the largest producer of oil globally, which would dramatically reduce its dependence on imports. 

The EIA also raised forecasts for 2014 U.S. output to 8.53 million bpd from the previous estimate of 8.46 million bpd. It said U.S. growth would account for 91 percent of the 1.3 million bpd rise in global oil output next year.

Meanwhile, the Keystone XL is not going to be approved. Trust me.

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An "aha" moment

I'm in my Inside Llewn Davis phase. As I wrote elsewhere regarding this movie:

I like the Coen Brothers but delayed seeing this movie for quite some time after seeing the trailer. I didn't think I would care for it. I didn't. Not the first time, or the second time. But then I started to really "see" the movie the third time I watched it. Now, each time I watch it, the movie gets better. It's all about the dialogue and the music.

When one sees the road trip with John Goodman, one starts to realize this could be a sequel to O Brother, Where Art Thou.  The music, I think, is better than that in "O Brother"; but unlike "O Brother," there is no plot per se. It's all about the journey, not the destination. [By the way, that's why I enjoy following the Bakken; it's all about the journey, not the destination.]

All I can say is this: if you watch it and don't like it, watch it a second time. If you still don't like it, watch it a third time, really late at night when you have no other distractions, and watch it from the perspective of a film critic. By the third viewing, you will be hooked, and will watch it again.

Tonight, my fourth viewing, I caught something (so obvious) that I had not seen before. When they arrive in Chicago, they stop at a roadside restaurant, of the Fred Harvey chain. I recall seeing the scene in an earlier viewing, but it did not "connect." This time it did.

This past summer we spent several days in the Grand Canyon area, and in the process came to learn of Mary Colter, the architect who worked for both the Santa Fe Railway and the Fred Harvey Company simultaneously, designing restaurants and hotels along the Santa Fe Railway route from Chicago to Los Angeles.

This is one of those rare "aha" moments when watching period pieces.

[By the way, the Coen Brothers do a great job showing the hypnotic effect of driving long distances in snow storms. They grew up in a suburb of Minneapolis and spent their coming-of-age years in the northeast, so they had plenty of driving-in-the-snow experiences.]

North Dakota Expects "Big Surge" In Production This Summer

I think I posted this story earlier, when it was running in a regional newspaper, such as The Bismarck Tribune. It's been picked up by Bloomberg (note the date, July 15, 2014):

North Dakota, the second-largest oil-producing state in the U.S., expects output to surge through the summer as more benign weather gives roughnecks extra time to work in the field.

Output rose about 3.6 percent to 1.04 million barrels a day in May, the state’s Department of Mineral Resources reported yesterday. It was the largest increase since August.

The growth came even as rain and high winds kept well-completion crews out of the fields for several days during the month. Better summer weather will lead to production growth in the region of 5 to 6 percent a month in June, July and August, said Lynn Helms, director of the state’s Department of Mineral Resources.

“We still expect the big surge to come in June, July and August in terms of completions and some really rapid production increases,” Helms said on a conference call with reporters yesterday.

North Dakota is home to the majority of the Bakken shale formation, an underground layer of oil-and-gas-rich rock. High oil prices and improvements in horizontal drilling and hydraulic fracturing technologies have helped output from the state’s portion of the Bakken rise fivefold over the past five years.

Texas, which extracts more than 3 million barrels a day, is the only state producing more crude. North Dakota pumped more oil than three OPEC member nations in May.

Much more at the linked article; much the same as we've heard before.

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Exponential Growth In Production

I discussed this at an earlier post.

I know I'm going to get into a lot of trouble for posting this again, but it's interesting to say the least.

Starting with production of 547,326 bopd in January, 2012, and currently standing at 1,039,635 bopd as of May, 2014, the exponential formula comes very close to:

P = P(0)*1.023^t

where P = current daily production
P(0) = initial daily production (January, 2012)
t = time in months (exponent)

Plugging into the formula:
1,034,579  bopd (May, 2014)= 547,326 bopd (January, 2012) * 1.023^28

At the same rate, in January, 2015 (the Director's Cut will be out in March, 2015):
P = P(0)*1.023^36
P = 1,240,992 bopd in January, 2015

Once you have that formula you can do all kinds of things with it.

If one starts with the base month/year of January, 2011, when production was 342,088 bopd --

• Using the same formula, one would be at only 849,500 bopd, so somewhere between 2011 and 2014, the pace of production has increased.

If one starts with the base month/year of January, 2010, when production was 235,925 bopd --

• Using the same formula, one would be at only 769,674 bopd, so somewhere between 2010 and 2014, the pace of production increased even more than that between 2011 and 2014.  

With the anticipated surge this summer, the monthly increase should be greater than 2.3% month-over-month through maybe October or November, but then there could actually be some "negative" growth.

If the rate were to remain 2.3% increase month-over-month over the next several years, North Dakota would cross the 2 million bopd before January, 2017 (i.e., late 2016), using 2012 as the base year.

Disclaimer: I often make simple arithmetic mistakes. I used an on-line calculator for the calculations.

Anyway, to each his own. 

War On Coal, US, Australia, And Common Sense -- July 23, 2014

Earlier I posted:

I doubt many folks will read the RBN Energy blog today: Burning natural gas this summer -- bluntly put: Texas will consume its own stored supplies to meet in-State needs first – depriving other States of a helping hand if need be. So low storage levels in Texas will likely have more impact out of State than in. Buried in that long post:

By October 2013, Texas’s stored gas had rebounded to 730 Bcf (only 2% less than its fall-of-2012 peak) but by March of this year in-state storage levels had plummeted to 418 Bcf, 26% lower than a year earlier and the lowest in the state since February 2004. 

Texas, with the most natural gas storage in the United States (in the world?), reported 26% lower storage of natural gas than a year early and the lowest in the state since February 2004. 

I don't think the word "coal" was mentioned it the RBN Energy post, but one can't explain away that dismal figure simply due to "the weather" (the polar vortex). Clearly there is something else going on. Yes, it's not that difficult to figure out: the war on coal is succeeding here in the US, and all that promised solar/wind energy simply cannot keep up.

Again, seldom reported: utilities need to add one-half MW of fossil fuel capacity for every one MW of solar/wind energy brought on-line for those periods (like all night) when the sun is not shining, and the wind is blowing too fast or too slow. 

The big story is not that natural gas stores are depleted; the big story is "why."

Don just sent me an interesting Motley Fool story that touches on this. Motley Fool is reporting:

The Australian Broadcast Corporation, Australia's public broadcaster, reports that electricity providers in that country are actually switching back to coal as the international price of natural gas is making coal a more cost-effective fuel to generate electricity. 

ABC also reports that Australian domestic gas prices may triple by 2021 as domestic producers elect to export gas to higher value international markets. 

Meanwhile, here in the states:

U.S. natural gas currently sits at about $4.10 per million British thermal units (MMBtu) as reported by the EIA, with futures even lower as reported by Bloomberg.

However, the international price of natural gas, as reported by the Federal Energy Regulatory Commission (FERC) is much higher than the U.S. price.

Natural gas in Asia and South America can be as much as three times the U.S. price, likely prompting U.S. domestic producers to develop export markets in pursuit of higher prices.

In addition, even in the U.S., the converted energy cost of coal is significantly lower than natural gas, as reported by FERC, potentially pushing the U.S. electricity generators back to coal. [Presidents come and go. Common sense tends to remain common.]

Motley Fool then goes into "clean coal" projects and carbon capture/CO2 EOR which have already been reported on the blog. Both projects are in ... drum roll ... drum roll ... Texas and one of the projects is being underwritten by the Obama administration. The other project is a joint project with Japan's JX Nippon.

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North Dakota Crude Oil Production and Exponential Production

From Calculus: Single Variable, Deborah Huges-Hallett (Harvard University) and Andrew W. Gleason (Harvard University), c. 1998, p. 14:

Whenever we have a constant growth factor, we have exponential growth. 

Month-over-month, the oil production in North Dakota increases by about 2 percent. Rarely, the month-to-month growth declines (from early winter to late winter, for example), and often the rate is significantly more than 2 percent month-over-month. But I don't think it's a stretch to suggest that over time, the month-over-month increase in North Dakota oil production has been exponential.

So far this year:

Month	bopd	% change
Dec-13	923227
Jan-14	935126	1.29%
Feb-14	952055	1.81%
Mar-14	977178	2.64%
Apr-14	1001149	2.45%
May-14	1039635	3.84%

Production change by month for all of 2012 and 2013 can be found here. The numbers may be very, very slightly "off" due to fact that the monthly production numbers are revised following the initial report. I don't always have the most current data, but it's very, very close. Close enough for retired government employees.

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A Note for the Granddaughters

One of my favorite pastimes with our granddaughters is to work with math with them, which we try to do every day. We probably succeed four days out of seven, which is not bad. We have not less than three different "series" of math texts and/or workbooks for the summer. She says she loves geometry so we have a separate book on geometry. We started going through the book, working the problems, but due to the short time left before they leave for a few weeks, I have been going through the book, not doing the problems, but just going over the concepts. Her memory is such that I am convinced that when she starts getting into geometry sometime in the next three years in middle school, she will say, "oh, yes, I remember that." Much of math is the fear of the unknown, I think.

On the other hand, her dad has the Singapore Math Series for her which she must do as prescribed, not skipping any problems or any pages: the textbook, the workbook, and the intensive practice book.

I was surprised how quickly the word problems became exceedingly more difficult after starting out with quite easy problems. She has not had algebra yet, but we have gradually been introducing the concept. When I saw the following problem, I could only solve it using algebra:

The total cost of 5 CDs and 3 video tapes was $169.20. The total cost of a CD and a video tape was $43.80. If I bought 3 CDs and 5 video tapes and paid with two $100 bills, how much change would I receive. 

Obviously, once one figures out the cost of a single CD or a single video tape, the rest is just "busy work."

Our older granddaughter, studied the problem for awhile, and then came up with a way to solve the problem without using algebra, and I am convinced that was exactly what Singapore Math expected. The series had not yet introduced algebra but yet there was a fairly simple, albeit somewhat tedious, way to solve the problem without using algebra.

I was pretty impressed with her reasoning. 

Bakken Projections Published In Boston Herald

From The Boston Herald:

Oil production in North Dakota and Montana's Bakken and Three Forks formations will average 1.1 million barrels per day this year, according to estimates announced Wednesday by a research firm.

Wood Mackenzie anticipates that oil production in the North Dakota and Montana sections of the Bakken and Three Forks formations will grow to 1.7 million barrels per day in 2020. [The Bentek study said 2.2 million bopd by 2022, so "we're" in the same ballpark.]

"We're very confident on the future of the Bakken," said Jonathan Garrett, an analyst at Wood Mackenzie. He added that the expected lifetime of a Bakken well is 25 years to 30 years.

Wood Mackenzie projects that $15 billion will be spent on drilling and completion of wells by Bakken participants in 2014.

The research firm also said there is close to $118 billion in remaining value in the American portions of the Bakken and Three Forks formations, which also stretch into Canada's Saskatchewan and Manitoba provinces.

A reader alerted me to the article and made a number of interesting observations about the article.

Two comments: first, one about drilling and completions CAPEX this year; and, second, "remaining value" in the Bakken.

1. $15,000,000,000 / 2,400 wells = $6.25 million / well. A fair number of Williston Basin wells will be very inexpensive Spearfish wells which would bring the cost/well down, but the article specifically says "Bakken participant." Everything I've seen suggests average well costs will be about $8 million at best, and several analysts have said KOG will have rates higher than the average. There must be a lot of very inexpensive Bakken wells on the margins of the Bakken to bring the average down to $6 million / well. One of the few operators who say they can get the cost / well down to about $6 million is Whiting.

2. Harold Hamm suggests the reservoir is close to one trillion bbls OOIP (blogged a long, long time ago). Even at a paltry 5% recovery rate, the total value of the remaining Bakken is staggering, much, much greater than the article above suggests. Even if one assumes half what Harold Hamm says: 500 billion bbls x 5% recovery x $50 / bbl -- the amount is way more than what the article suggests.

Regardless, "fun" to see an article like this in a Boston newspaper. 

Predicting Productivity In The Bakken

Wow, timing is everything.

Yesterday I posted a long meandering note on predicating productivity in the Bakken.

Now, a four-page internet article on just that being reported at Rigzone.

We recently authored an article in the Musings discussing the impact of the extremely cold winter on oil output in the Bakken basin of North Dakota.

When we examined the EIA’s March Drilling Productivity Report, we were startled by the chart showing a steady increase in the basin’s oil output and the accompanying forecast for future monthly increases. That shock sent us back to look at all the monthly charts for the Bakken’s output projected by the EIA.

Every month showed a projected output increase. Given what we knew about the production output during the winter months obtained directly from the North Dakota Department of Mineral Resources (DMR) that showed a significant drop in production, and especially Bakken output, which is what dominates the state’s oil production, we wondered about the EIA’s forecasts.

To explore the subject, we plotted the monthly output estimated by the EIA along with its next month forecast. We then looked at what the starting point for production was the next month along with its projected output one month forward. We did that for each month from October 2013 through March 2014, which gave us an estimate of Bakken production for April 2014. Next, we went to the North Dakota DMR web site and got each of the month’s preliminary and revised monthly production statistics for the entire state and for the Bakken formation. All of monthly data is presented in Exhibit 2.

As the DMR data is reported with a lag of two months, the last preliminary monthly output figure for the Bakken formation is for January 2014 of 871,672 barrels per day (b/d). That estimate contrasts with the EIA’s January 2014 projected output of 1,025,000 b/d made in December 2013. That is a difference of 153,328 b/d, or 17.6% of the DMR estimate and 15% of the higher EIA estimate. If we measure the DMR Bakken production estimate against the EIA’s starting point in January, the difference is 15.2%.

A great beginning. And it appears one day after my long meandering article. Gotta love it.

The article ends on an unsatisfactory note. 

How Much Is The Bakken Capable Of Producing? Idle Chatter

Updates

April 3, 2014: the post below stands alone; I don't think I will update it. I will add updates up here. One of the points I made believe was the fact that affect daily production in the Bakken is the completion techniques (which affects the decline curves).

Something I failed to mention that affects the rate of increase in bopd month-to-month is time from spud to first sales. I think I read that in the Bakken the average time from spud to first sales is about 120 days. I read, if I recall correctly, that in some other field somewhere in the US for some operator, the time from spud to first sales was down to 30 days. I could be way wrong on that, but think about that. If the "time from spud to first sales -- TFSTFS -- decreased some 120 days to 90 days in the Bakken, think what that would do for the rate of increase in bopd month-over-month.

During the winter, they probably cannot improve the TFSTFS too much (fracking is limited in the winter) but a) in the summer fracking should follow drilling fairly closely if it were not for operational delays caused by pad drilling; and b) zipper fracks are really, really fast and perfect for pad drilling.
 

Original Post

I'm really not sure I want to go down this road. It's possible I will meander around for awhile, and if it doesn't go anywhere, I will simply delete the post, or leave it up for folks to think about, but deny I ever wrote it.

It has to do with the Bentek study (linked at the sidebar at the right) and a comment I received earlier regarding the Bentek.

There are so many story lines with regard to the Bentek study, one hardly knows where to begin. The first story line, of course, has to do with questions like: who commissioned the study, why was it commissioned, to what degree was it helpful, and whether it contained actionable information for those who commissioned it, and for others who see the study.

Another story line that will evolve over time is the "accuracy" of the study.

A third story line is what question was Bentek answering with regard to production: was Bentek predicting what the Bakken would produce over time, or what the the Bakken could produce over time.

There must be a dozen other story lines one could entertain from that study, but I'll spend a few minutes on the third story line mentioned above.

For the longest time I had been perplexed how to answer folks who asked me how big the Bakken is, or how much it would produce. I was perplexed because I was stymied by geo-politics. If Saudi wanted, could Saudi flood the world with oil and drive high-cost operations (Canada oil sands, Bakken shale) out of business? Could activist environmentalists succeed in getting fracking banned completely? Could Ford invent an automobile that ran on water and sell a production model for $5,000?

A few months ago I had an epiphany. Now when folks ask me how big the Bakken is or how much the Bakken can produce, I re-phrase the question: what are the roughnecks capable of producing in the Bakken? When I ask that question I am taking fringe activist environmental possibilities and geo-politics out of the equation. I am also taking the price of oil out of the equation. When I say "roughnecks" I use the term in a more general way, to include all the folks involved in actually producing oil.

I'm simply looking at the size of the reservoir (the "original oil in place"); the recovery rate; the technology; the workforce; and other similar variables.

I Don't Want To Talk About It, Rod Stewart and Amy Belle

Estimates of the size of the reservoir/the OOIP have increased significantly since the 2008 surveys. It will be awhile (if ever) before we seen another Williston Basin survey, but if we do, I assume the OOIP estimates will be further increased.

The recovery rates have similarly increased. When the boom began, "we" were talking about recovery rates of 2 - 5%. Folks were considered nuts if they talked about 8%. Now, there was a throwaway line in a linked article last week that suggested the recovery rate in the Bakken was 15% in some areas (this is primary production; we are not talking about enhanced oil production). 

Technology is obviously a big player in production estimates. There are a number of issues here, but I will limit it to "speed." How fast can we get the oil out of the Bakken? There are several factors:

• rigs: more powerful; get to total depth more quickly
• pad drilling: less down time
• knowledge base: each well provides geologists with more information about the Bakken
• geologists: with more experience, better wells
• better completion techniques: sand? ceramic? how much? density of perforations? completions techniques always getting better; best practices spreading across operators

Decline rates affect daily production. The decline rates are not getting worse; the decline curves are actually improving. This goes along with the discussion on completions.

I think the most interesting variable is the workforce. Production is, obviously, a function of the work force.

Work force

Size: The size of the work force is important: for an adequate work force to be in place and remain in place in a free society, they have to have more than adequate shelter, food, quality of life, and companionship. An employee has to like it "there" and feel "needed" and "want to stay for the duration." If the work force is unhappy with what they get out of the Bakken they will move elsewhere if jobs are available elsewhere. There is probably some inverse relationship between jobs elsewhere and coming to North Dakota to work.

Trained: the size of the work force won't matter if they aren't trained to do the job. I couldn't drive a truck if my life depended upon it, and yet, I assume, the skills needed to get a CDL rank somewhat lower than other jobs in the oil patch (don't take that out of context: there's a huge gap between the 18-y/o who just got his CDL and the mature driver who's been driving oil trucks in the Bakken for the past seven years). The Bakken competes for trained workers and as the national economy improves, that competition will get tougher. Texas, south of San Antonio, where the Eagle Ford is, beckons. Nice weather, low cost of living.

Specialists: the supply of specialists is limited and it takes time to train new specialists. There was a "specialty" that just popped up on my radar last week -- I had not seen this before, but apparently the US is running short of welders. How crazy is that? Bakken production could be held up by the availability of welders. But also, papers don't get signed without lawyers dotting "i's" and crossing "t's." There are only so many oil and gas lawyers around. Backhoe operators. They can ship a gazillion Bobcat backhoes to the Bakken but if they don't have the operators, those things don't drive themselves (yet). Interestingly enough, the chokepoint in the Bakken might be electricians. Every well requires the services of an electrician. Even if the pumps are run on natural gas, it requires an electrician to hook them up. You know, I was just thinking (that's a scary thought). Remember those night-time photos of the Bakken taken from space? You know the ones I'm talking about. The ones where folks think they are all images of natural gas being flared. In fact, very few of those images are of flares; 99% of the light coming out of the Bakken at night is related to lights on the rigs themselves and/or the well pads. The luminosity of the "Bakken light" may not be as bright as Chicago, but it covers a bigger footprint. When you see that satellite photo, think: electricians. It's 99.9% light, with the rest flared natural gas.

Conclusion

This is a work in progress. But I have errands to run. I will add to this post later, but you get the idea. I no longer worry about what the Bakken will be producing in the year 2022. If fracking is banned completely, the Bakken won't be producing much oil. If the Saudis flood the world with $20 oil for the rest of eternity, the Bakken won't be producing much oil in 2022.

I look at this: based on the size of the work force, based on what banks are willing to lend, based on technology, based on how fast paperwork can be accomplished, based on the number of hours in the day, based on the experience of the work force, based on simply getting the job done, what is the likely production capability, in bopd, of the Bakken on a yearly basis going forward?

The tea leaves tell me that "North Dakota" feels comfortable with about 2,500 new Bakken wells each year for the next few years.

From there, one simply watches the new OOIP estimates; the takeaway capacity at the end of each year; the time from spud to first production; the recovery rates (probably the biggest unknown); and, the history of the preceding years in the Bakken and one can pretty much figure out the "bopd" potential of the Bakken.

For calendar year 2014, the OOIP estimates have probably not changed since last year; the takeaway capacity is increasing slightly but not appreciably so; the work force has stabilized; the recovery rates probably have not changed much from 2013; and that pretty much leaves what the rough necks, geologists, and frack teams can do with 2,500 new wells.

The biggest thing that rough necks, geologists, and frack teams can do with 2,500 new wells is improve completion techniques resulting in a) higher first-year production numbers; and b) better decline curves. The tea leaves tell me this is where the operators are focused and huge strides are being made.

[Note: somehow I missed EURs -- I'm not sure if EURs are pertinent to the discussion; I have to sleep on this.]

Daily Oil Production, North Dakota, January, 2012 - December 2013 -- Just For The Fun Of It

Updates

July 23, 2014: see also this post and the comment it generated. 

November 21, 2013: based on Platts story today that North Dakota produced 945,000 bopd in October, it is unlikely that North Dakota will hit the one-million-bopd milestone by the end of the year, but it will be close: the weather will have to cooperate, and prices will have to cooperate to encourage operators not to choke back. 

November 16, 2013: wow -- huge story in The Wall Street Journal. According to the EIA, "oil companies in the Bakken will reach the million-barrel milestone in December, 2013." A long article. Fun to read. Another U.S. oil field, the Eagle Ford Shale in South Texas, hit the million-barrels-a-day milestone in May of this year, according to the EIA data. The Permian Basin — the massive field in Texas that’s been the foundation for U.S. oil production for decades – got there in May 2011.

October 15, 2013: updated, most recent data -- August, 2013.

September 13, 2013: updated, most recent data -- July, 2013.

July 15, 2013: updated, following May's numbers.

July 9, 2013: according to this site, North Dakota officials predict daily production to reach 850,000 bopd by the end of 2013.  I think the state will hit 850,000 bopd by the end of August (remember: reporting lags two months, so we won't see that figure reported until Halloween).

July 7, 2013: Genscape is reporting (this was reported back on June 13, 2013):

Genscape is predicting crude production in the Bakken will continue its growth trend with 127 Mb/d added between April and the end of the year. By year end 2014, Genscape is predicting production will reach 1.1 MMb/d.

Genscape has expanded its network of proprietary real-time energy monitors to track Bakken production/transportation from 12 rail terminals and two pipelines. In April, 84% of crude produced in the Bakken was transported by rail, while the other 16% was transported by pipe. Rail remained a viable source of transportation in April as the spread between the coastal markets and the Bakken remained wide, averaging $17/bbl. However, this spread has come in significantly since then and volumes are now trending more towards pipeline. Nearly 30% of crude in May was transported by pipeline.

June 23, 2013: some other recent stories on Bakken production

• NDIC expects surge in crude oil production this summer ; Lynn Helms, Director, NDIC, as quoted in The Dickinson Press, April 17, 2013
• Bakken could produce 2 million bopd by 2025 -- slide 15 of a recent MDU presentation

June 23, 2013:  after reading the original post below, go back and read this note posted back in September 14, 2010, in which it was widely predicted that North Dakota would be producing one (1) million bbls of oil per day by .... drum roll ... 2020.

Through the end of this year, if oil production in North Dakota was to increase by just 1% each month, North Dakota would be producing 860,000 bopd. At that rate, just 1% increase each month, North Dakota would pass 1 million bopd by May, 2015.

In the past twelve months (April, 2012, through April, 2013, production has fallen below a 1% increase on only three occasions: 0.52% in March, 2013; and a decrease month-over-month on two occasions due to severe weather. May, 2013, had some severe weather so it's likely that production will decrease again month-over-month when results are posted next month.

At just 2% increase each month, North Dakota would pass 1 million bopd by April of next year (2014).

With takeaway capacity well in excess of 1.3 million bopd, the only thing holding back that 1-million-bopd threshold: natural gas processing. Operators are choking back oil production due to excess flaring due to inadequate natural gas processing.

Update

The original post was to project when/if the one-million-bopd would be reached in calendar year 2013. It was not; we came close, but the severe weather in December most likely prevented that milestone from being reached. The milestone will be reached in early 2014. This page will not be further updated. It served its purpose.

Original Post

Three different scenarios (data is updated when new numbers come out).

Four columns in each scenario.

• First column: month/year
• Second column: barrels oil per day (from NDIC website)
• Third column: increase or decrease from previous month
• Fourth column: A (actual) or E (estimate)

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

The first scenario: the estimate is based on previous year's increase/decrease.

Month      bopd     %  chg act/est Jan-12 547326      2.29% A Feb-12 559370 2.20% A Mar-12 580415 3.76% A Apr-12 611329 5.33% A May-12 644345 5.40% A Jun-12 664475 3.12% A Jul-12 676729 1.84% A Aug-12 704478 4.10% A Sep-12 729477 3.55% A Oct-12 749097 2.69% A Nov-12 735276 -1.85% A Dec-12 768977 4.58% A Jan-13 738041 -4.02% A Feb-13 779149 5.57% A Mar-13 783184 0.52% A Apr-13 793852 1.29% A May-13 810129 2.05% A Jun-13 821598 1.42% A Jul-13 875736 6.59% A Aug-13 911242 4.05% A Sep-13 931940 2.28% A Oct-13 945182 1.42% A Nov-13 976453 3.31% A Dec-13 923227 -4.45% A ******************************************************************* If one wants to use a straight 1% for the rest of the year (month-over-month): Month bopd   % chge act/est Jan-12 547326 Feb-12 559370 2.20% A Mar-12 580415 3.76% A Apr-12 611329 5.33% A May-12 644345 5.40% A Jun-12 664475 3.12% A Jul-12 676729 1.84% A Aug-12 704478 4.10% A Sep-12 729477 3.55% A Oct-12 749097 2.69% A Nov-12 735276 -1.85% A Dec-12 768977 4.58% A Jan-13 738041 -4.02% A Feb-13 779149 5.57% A Mar-13 783184 0.52% A Apr-13 793302 1.29% A May-13 811262 2.26% A Jun-13 821598 1.25% A Jul-13 875736   6.59% A Aug-13 911242 4.05% A Sep-13 931940 2.28% A Oct-13 945182 1.42% A Nov-13 976453 3.31% A Dec-13 923227 -5.45% A *****************************************************   If one wants to use 2% increase, month-over-month: Month        bopd     % chg act/est Jan-12 547326 Feb-12 559370 2.20% A Mar-12 580415 3.76% A Apr-12 611329 5.33% A May-12 644345 5.40% A Jun-12 664475 3.12% A Jul-12 676729 1.84% A Aug-12 704478 4.10% A Sep-12 729477 3.55% A Oct-12 749097 2.69% A Nov-12 735276 -1.85% A Dec-12 768977 4.58% A Jan-13 738041 -4.02% A Feb-13 779149 5.57% A Mar-13 783184 0.52% A Apr-13 793302 1.29% A May-13 811262 2.26% A Jun-13 821598 1.25% A Jul-13 875736 6.59% A Aug-13 911242 4.05% A Sep-13 932962 2.28% A Oct-13 945182 1.30% A Nov-13 976453 3.31% A Dec-13 923227 -5.45% A