One-Sixth Of The Bakken/Three Forks Have Been Drilled -- NDIC, August 15, 2015

Updates

August 16, 2015: I lose track of things in the Bakken. I vaguely remember blogging about a staggering number of wells that would be necessary to drill out the Bakken. When I wrote the original post (below) and then the update yesterday, I thought I was missing something. I knew I was one of the first to suggest 48,000 wells would be needed, but I also knew that I had posted a much bigger number, but just couldn't find it yesterday.

At the height of the boom, 2010 - 2014, things were moving so fast in the Bakken, it was hard to keep track of everything, but I knew I had blogged a number much bigger than 48,000 and a number much bigger than 60,000 -- the number of wells necessary to drill out the Bakken.

I stumbled across one such post (but there are others, and if I find those posts I will post them. Anyway, back on April 11, 2014, it was suggested that as many as 120,000 wells might be necessary to drill out the Bakken before it's all over.

August 15, 2015: the Bakken boom began in 2007. It's taken almost eight years to get to 10,000 wells, one-sixth of what is projected to drill out the Bakken. The early years did not see as many wells as in the 5th and 6th and 7th years, but now with the price of oil, the number of wells being drilled will also decrease. So, let's say it takes about five (5) years to drill 10,000 wells (2,000 wells/year -- which is about right). One-sixth of all wells takes five (5) years; that means about 25 more years of drilling, taking us out to 2040 of active drilling the Bakken / Three Forks. My hunch is that it will take a lot more than 60,000 wells and a lot longer than 25 years of drilling.
 

Original Post

 

If I ever run across my early posts suggesting that it would take upwards of 48,000 wells to drill out the Bakken I will link them again for archival purposes. I can't recall if I ever suggested more than 48,000 wells, but this was at a time when they were looking at significantly fewer, maybe 20,000 wells (which looking back is incredibly hard to believe).

Today there is an article in The Dickinson Press suggesting it will take 60,000 wells to drill out the Bakken/Three Forks and to date, 1/6th have been drilled.

I wrote Don:

I have a PowerPoint presentation from April, 2013, by Rollefstad (Williston's economic director at the time). If I remember correctly, this was one he posted and then quickly took down (I think there were some "borrowed" slides from corporate presentations he realized he could not use), but fortunately I saved it.

This was back in 2013, his projection, based on 4 middle Bakken wells in each 1280-acre unit; and, four TF wells in each 1280-acre unit, it would take 50,000 wells total.

This was before they even talked about a) lower TF benches; b) mega-fracks.
At the right price, most of the Bakken, even the outlying areas will have 4/4 (MB/TF) wells in each 1280 and in the sweet spots, way, way more.

This will be another good article for the archives.

At $15 oil, they've probably drilled every well they will drill in the Bakken.

At $150 oil, my hunch is they will drill a few more than 60,000 before it's all over.

At the linked article:

Oil companies have drilled one-sixth of the potential Bakken and Three Forks wells in North Dakota, exceeding 10,000 wells in the shale formations for the first time in June.
The state’s oil production rose slightly in June to more than 1.2 million barrels per day, the second-highest production month behind only last December, the Department of Mineral Resources said Friday. 

The nearly 1 percent increase in oil production was driven by companies that were aggressive in fracking and completing oil wells in June, Director Lynn Helms said.
Helms said the current number of active drilling rigs - 74 on Friday - and the inventory of wells that needs to be completed is sufficient to maintain production of 1.2 million barrels per day for 24 months. 

“We think that we’re in a period of sustained low prices. It could last two years,” Helms said. “The capacity is there to maintain North Dakota production for a full two years even at these sustained low prices. It’s going to be a long, difficult period.”In June and July, the department saw a surge in drilling permit applications with operators optimistic about oil prices, Helms said.

But "everyone" (I assume) expects things to get worse before they get better.

Everything else in the article can be found at the Director's Cut.

However, there is one huge data point in this month's Director's Cut (June, 2015 data) from previous data points.

Previously, Mr Helms said it would take 110 - 120 completions each month to maintain production near 1.2 million bopd. This month he did not say the number of completions required, but instead said that "the current rig count [around 72] plus NC [DUCs] well inventory is sufficient to maintain 1.2 million bopd for 24 months.

Permit Projections -- August 23, 2014; Another EOG "400-Series" Well

North Dakota data. 

Permits issued as of this date, August 22:

• 2014: 1,879
• 2013: 1,567
• 2012: 1,431

Projection on this date for total permits issued by end of calendar year:

• 2014: 2,931
• 2013: 2,444
• 2012: 2,232

My numbers may differ from those of the NDIC or others. These are only oil and gas permits; no salt water disposal well permits.

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EOG has another "400-series" permit:

• 29190, SI/NC-->TATD --> conf (noted 9/16) --> 622, EOG, Parshall 406-34H, Parshall. I talked about the EOG "400-series" wells earlier; short lateral; Bakken NOS; middle Bakken target; drilling fluid: salt water in the lateral; spud date, October 14, 2014; FTD date, October 21, 2014; target, Middle Bakken (in zone: 100%); 5,263' lateral; 640-acre spacing; tracked here; 21 stages; cum 5.1 million lbs; t10/16; cum 47K 5/17;

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Global Warming

Some weeks ago I mentioned that I had a perception that it really was cooler this summer than past summers. Now the data is starting to come in. Watts Up With That is reporting:

It's been a "cold summer": US daily record minimums outnumbered record maximums 3 to 1 in the last 30 days. Plus, there have been new snowfall records, almost unheard of in summer. 

But WUWT is reporting some "strange things happening over at government-sponsored weather sites."

Weather Underground is reporting winter in August in Wyoming and Montana, and I assume this weather will track east, giving relief to hot summer weather in the east.

Switzerland Developer Preparing To Break Ground On Half-Billion-Dollar Residential/Commercial Project In Williston, North Dakota -- Ground Zero For The Bakken

Updates

May 23, 2014: I received this as a comment, but comments are not google-searchable, so moved it here for easier access:

http://www.sys-con.com/node/3091627

This link is a little more detailed than the Bloomberg on Williston Crossing. Note the history of the developers of Williston Crossing. Sounds like they are legit, have the resource funds already in place, intend to break ground March 2015 with completion date of 2017. 

They have a huge history of million of square feet of retail, malls, etc... I think this might actually be for real. 

The location is in question. If it is near the 4 mile west of town, the only available acreage left on 2/85 going into WIlliston (west of town) is the large parcel between the McCody concrete office building and Schlumberger's new facilty (north side of the highway). I'm not sure if there is 228 acres? Possibly. 

Otherwise, the only other land is west of the 4-mile corner on the south side of the highway (US Highway 2), between the 4-mile and Trenton-turn off? Could be interesting. 

Unless they are talking about the new interchange and bypass NORTH of Williston where Pat Murphy is planning his North Star Center (550 acre development breaking ground in June).

The link is interesting for other reasons.

Some time ago there was a presentation suggesting how many wells might have to be drilled in the Bakken before it's all over. That presentation was removed quickly from the internet suggesting that it came from proprietary source and was not approved for general release. I don't know. "Everyone" agrees that the "new" minimum number of Bakken wells will be 50,000. Many folks now talk about numbers higher than that, but like "whisper numbers" on Wall Street are seldom found in print (for obvious reason). This link, in this update:

Rapid expansion in the petroleum sector has led to unprecedented regional growth. Rolfstad says, the Bakken Shale currently has approximately 8,000 operating wells, and is adding about 2,100 per year. Given the multiple oil formations under the Williston area, and the trend towards situating multiple wells in one location and accessing surrounding territory via horizontal drilling, the latest thinking is that there could be 140,000 more wells to be drilled. He says completion times are indeed getting shorter, but there are decades of drilling ahead of us, and after, each well can produce for upwards of 40 years.  

In addition to that incredible data point, the very next paragraph:

The area's population is also growing at a swift pace -- nearly nine percent per year through 2017 -- and will continue to grow to 159,000 over the next 10 years. According to Rolfstad, "Each oil well leads to between one and three permanent production jobs. Drilling requires manpower, and that workforce is here today. Production requires manpower as well -- in fact a similar number of workers -- with a key difference being that this workforce can settle down in one place for an entire career. That's where we are headed." 

And so it goes. 

By the way, the numbers are starting to converge: a one-trillion-barrel reservoir; 140,000 wells; EURs of 500,000 bbls; 7% recovery rate. It's hard to keep track of the zeros but if you do the math, one comes to some very interesting ... should we say, coincidences?

I've posted this before: when I was last in Williston, I had an "aha" moment. The oil industry in the Bakken seemed to reach a plateau two, maybe three years ago with drilling 2,000 wells/year. The tea leaves suggest "everyone" is happy with 2,000 wells/year; over time, possibly less, but maintaining production between one million and two million bopd. My return visits to the Bakken over the past three years suggest that there are enough resources: workers, housing, rigs, pipeline, CBR terminals, etc., to comfortably manage 2,000 new wells/year. But the "aha" moment: the building continues at an incredible rate. Why? More natural gas processing plants need to be built. Permanent workers need to be in place to service the thousands of wells currently producing in North Dakota, and growing by 2,000/year. Yes, at some point, the manpower intensive drilling program will end -- but that might be 20, 30, or 40 years from now. 50,000 wells at 2,000 wells/year = 25 years. Meanwhile, each new well is going to require one to three new permanent workers. This does not include the number of opportunities that open up to "serve" these workers: restaurants, entertainment, shopping, banking, legal, medical, etc. I still think it would serve folks well to look at Calgary, Alberta, Canada, pre- and post-1947.

Original Post

A huge "thank you" to a reader for alerting me to the story.

It's hard to separate fact from fiction, the credible from the incredible, the pie in one's oven from "pie in the sky," but the Bakken never fails to provide exciting copy. If this pans out, this could be the story of the month; as fast as the Bakken seems to be moving, it is certainly the story of the hour, and published in Bloomberg, no less (in case that link breaks, same story in FuelFix): 

A Swiss developer is planning to build a $500 million real estate project in Williston, North Dakota, where a surging energy industry is leading to a population boom and rising property demand.

The two principals of developer Stropiq Inc. are at the International Council of Shopping Centers conference in Las Vegas this week trying to lure retailers to the 219-acre Williston Crossing project, scheduled to break ground in March. The 1 million-square-foot (93,000-square-meter) project will include retail, entertainment, hotel, office and multifamily buildings.

Stropiq and investors such as KKR & Co. are rushing to accommodate a ballooning population of energy workers in Williston, located in the oil-rich Bakken shale formation. The average rent for a small apartment in the western North Dakota town is higher than in New York or San Francisco, according to Apartment Guide. Along with housing, retail offerings in the city are in short supply, Stropiq executives said.

“If you want anything that doesn’t exist in a grocery store or Wal-Mart, you have to drive two hours,” said Terry Olin, a Stropiq principal and graduate of North Dakota State University in Fargo. “We’d like to change that as fast as we can.”

Stropiq already has a 93-unit apartment complex under development in Williston, with the first building scheduled to open in July, said Ellen Simone Weyrauch, a company principal. 

Folks may recall that General (ret) Petraeus just visited Williston a few weeks ago.

The booming economy has also lured other real estate investors, including KKR, developer of a housing development in Williston. Minot, North Dakota-based Investors Real Estate Trust (IRET) is building two apartment projects in Williston, the 44-unit Dakota Commons and the 288-unit Renaissance Heights, both scheduled to open next year. 

Stropiq Inc was also mentioned in a Reuters story back on June 30, 2013:

While billions of dollars in oil money may be rushing into North Dakota, big money has resisted financing large real estate deals there, barring some projects entirely and leading other developers to self-finance.

Many would-be financiers say the North Dakota oil patch real estate market is too hot to handle right now, with demand for housing outstripping supply, fueling high prices. The average two-bedroom apartment in the oil patch rents for more than $2,500 per month, helping drive land prices sky-high and sparking concern about a bubble. 

National homebuilders such as Pulte Group, D.R. Horton and Hovnanian Enterprises have yet to enter North Dakota. Pulte said it was focused on improving its market share on the East and West Coasts, as well as some Midwest states. The other two declined to comment. 

Some developers have decided to write their own checks in the meantime. Private equity firm KKR, which broke ground last month on 330 apartments as part of a 164-acre housing development, has yet to convince a bank to fund a construction loan. Plans for the total project include 810 apartments and lots for more than 300 single-family homes.

Staggering Energy Growth

A reader alerted me to this incredible story. A marketing/advertising story; not a straight news story; take some of it with a grain of salt.

CoStar Group is reporting:

Growth in the domestic energy industry is driving heated demand for prime real estate, predominantly in a handful of cities where the oil and gas industry is booming. That growth is expected to create more than 3.5 million American jobs by 2035, including 700,000 in the next two years alone.

Leonardo Maugeri, a former oil industry executive from Italy who is a fellow at the Kennedy School’s Belfer Center for Science and International Affairs, studied the performance of 4,000 American shale oil wells and the work of about 100 companies involved in shale oil production.

In a paper titled “The Shale Oil Boom: A U.S. Phenomenon,” Maugeri wrote that the unique characteristics of shale oil production are ideal for the U.S. and unlikely to be mirrored elsewhere in the world. These factors include the availability of drilling rigs, and the entrepreneurial nature of the American exploration and production industry, both critical for the thousands of wells required for shale oil exploitation.

Maugeri said the number of American shale oil wells in North Dakota and Texas could soar from the current 10,000 to more than 100,000 working wells by 2030. He said steady improvements in technology and cost would continue to drive industry growth in the shale oil fields in the Dakotas and Texas.

A key distinction between shale oil production and conventional oil wells is the intensity of drilling required to extract shale oil. Maugeri noted that the Bakken-Three Forks region in North Dakota required 90 new wells per month to maintain production of 770,000 barrels per day. Shale oil wells reach peak output almost immediately but quickly decline, so multiple new wells constantly need to be drilled. Maugeri believes only the U.S. oil industry is capable of such drilling intensity, he wrote. 

The consensus is that North Dakota will need 50,000 wells to drill the Bakken, so 100,000 wells for North Dakota and Texas is not unreasonable.

Only "90 new wells per month to maintain production of 770,000 bopd." North Dakota easily has the capability of 200 wells/month. 

Several story lines. The biggest story line: an incredible opportunity for young investors.

Getting A Handle On The Size Of The Bakken

Acreage

Prudhoe Bay: Don reminded me, from wiki:

Prudhoe Bay Oil Field is a large oil field on Alaska's North Slope. It is the largest oil field in both the United States and in North America, covering 213,543 acres and originally containing approximately 25 billion barrels of oil. The amount of recoverable oil in the field is more than double that of the next largest field in the United States, the East Texas oil field. The field is operated by BP; partners are ExxonMobil and ConocoPhillips Alaska.

North Slope, associated with Prudhoe Bay, not developed, everyone is talking about:

• 500,000 acres leased

The Bakken (most statistics are for North Dakota only)
Obviously, comparing acreage from one one field to another oil field is comparing apples and oranges, but Don pointed out an interesting statistic: Prudhoe Bay: 200,000 acres. In the Bakken (numbers rounded):

• KOG: 150,000 net acres
• NOG: 180,000 net acres
• Oasis: 335,000 net acres 
• Statoil: 360,000 net acres (ND; additional acreage in MT)
• COP: 600,000 net acres
• XOM: 615,000 net acres (DNR deal; XTO) -- Don's estimate
• Whiting: 700,000 net acres
• CLR: 1.1 million acres

Production

Prudhoe Bay, again:

• Cumulative North Slope oil peaked in 1989 at 2 million barrels per day. 
•  (Greater Prudhoe Bay: 1.5 million barrels per day, but had fallen to 943,000 barrels per day in 2005, while Greater Prudhoe averaged 411,000 barrels per day in December, 2006 and Prudhoe itself averaged 285,000 barrels per day. 
• Total production from 1977 through 2005 was 11 billion barrels. 
• As of August 2006, BP estimated that 2 billion barrels of recoverable oil remain and can be recovered with current technology.

The Bakken, North Dakota only:

• boom started ~ 2007
• production continues to rise; currently around 775,000 bopd
• most agree: will peak above 1 million bopd
• some suggest: will peak above 1.5 million bopd
• one source: will peak at 2.1 million bopd

Number of wells

Prudhoe Bay: about 1,000 (per wiki)
Bakken, North Dakota: >4,000 (estimate)

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Following the Rollefstad Presentation in Las Vegas in April, 2013, the next speaker, I am told increased the potential. A reader said:

Go to slide 42 of the Rolfstad presentation, it shows 18 wells on the pattern.

The next speaker said (From Bakken Services) that Tom’s presentation only touched on 4 layers of the Three Forks.  He indicated that layers 5 and 6 are being explored.

That would push it the high 20’S.    So 28 wells per spacing unit, 7,000 spacing units 196,000 wells.

32 wells per spacing unit, 7000 spacing units = 224,000 wells

The math is silly but moving up.