Biggest Bakken Stories of the Past Week

Week 9, 2010 (Feb 28 - Mar 6, 2010)

1. New railroad oil loading facility, Dickinson, operational by Oct 2010

Will add 60,000 barrels/day takeaway capacity

350,000 bbls (pipeline) +
60,000 (Stanley/EOG/BNSF) +
60,000 (Dickinson) =
470,000 bbls/day by end of 2010

2. NDIC grants Hess six permits on one location; second time this year.
3. Record number of active rigs in North Dakota: 99.
4. CLR announces its first Eco-Pad; in McKenzie County.
5. Another lackluster Hess well.
6. Questar: an investing opportunity?
7. Sweeping changes proposed by the NDIC, March dockets.
8. CLR announces new method for determining IPs.
9. Price of oil solidly above $81/bbl.

This is What Keeps Me Excited About the Bakken: The Dinsdale 2-4

I posted this many months ago, but it's been buried, so I thought I would bring it back. This is a conventional well (vertical, not horizontal) in the Dickinson area, spudded in 1996, targeted the Lodgepole, and has produced more than 4.6 million barrels of oil as of last October, 2009.

Dinsdale 2-4 (Lodgepole, conventional well)

Permit/File Number: 14213
Producer: Trans Texas Gas
IP: 3,357 bbls/day
IP Test date: 12/30/1996
Cumulative oil: 4,634,619 (as of October 5, 2009)
Cum MCF Gas: 1,901,850 (316 boe)
Comment: this was a Lodgepole well; inside the city limits of Dickinson; a vertical well. This is a phenomenal story: 4 million barrels oil since spudding, and it continues to average 250 bbls/day. One just has to wonder how big that pool of oil is.

Note the file number, 14213; NDIC is now approaching 19000.

4 million barrels at $40/barrel = $160 million at the wellhead; at $20/barrel, it's still $80 million.

Re-Visiting EOG in the Parshall

Awhile back I posted a note about EOG's request for three horizontal wells in each of the following sections:

Sections 1 - 36 in 151N-90W (36 sections);
Sections 1 - 36 in 152N-90W (36 sections); 
Sections 1 - 6, 8 - 17, and 19 - 36 in 153N-90W (34 sections);
Sections 1 - 36 in 154N-90W (36 sections);
Sections 25 - 28, 31 - 36 in 155N-90W (10 sections);
Sections 1, 10 - 15, 23 - 26, and 36 in 151N-91W (12 sections);
Sections 1, 2, 11 - 15, 22 - 26, 35, 36 in 152N-91W (14 sections);
Sections 5 - 8, 17 - 20, 29 - 32 in 153N-89W (12 sections).

This is the entire Parshall oil field and maybe a few sections in adjoining fields. Three wells in each of these 190 sections would be a total of 570 wells, the highest density of wells in the Bakken. I haven't counted lately, but I figure that about three-quarters of all these sections (about 140) already have wells.

You can access the full 19 pages of the December 17, 2009, docket at https://www.dmr.nd.gov/oilgas/dockets/2009/docket121709.pdf.

When I first reported that, I had a different sight picture of what the configuration of these three laterals/section might look like.

Now that I've seen the recent Hess permits for six long laterals on one pad, my hunch is that the EOG horizontals will be laterals targeting three formations: Middle Bakken, the Upper TFS, and the Lower TFS. 

The only problem I have with this: most of these sections already have a lateral. Perhaps, the legalese suggests that the current well in each section counts as one, and EOG will be drilling an entirely new well with two laterals, one each in the Upper TFS and in the Lower TFS. That would only be 380 new wells, not 570.

Oops! Hess Did It Again!

In my Ross field update I noted that Hess has permits for six wells on one pad. In section 27-156-90, Hess will drill six wells on a 2560-acre unit. The nomenclature suggests these will be long laterals, and that three laterals will go to the west, and three laterals will go to the east. My hunch is that the three long laterals going east will target the Middle Bakken, the Upper Three Forks Sanish, and the Lower Three Forks Sanish. The three long laterals going west will target the same formations.

Hess has done it again.

In the daily activity report, March 5, 2010, Hess was granted permits for six wells on one pad in the Pleasant Valley oil field (permits #18775, #18776, #18777, #18778, #18779, and #18780). This time the pad will be on section 21-157-94, and the laterals, instead of running west-east, will run north-south. Again, my hunch is that three long laterals going north will target the Middle Bakken, the Upper TFS, and the Lower TFS; and three long laterals going south will target the same formations.

So, now we have CLR with the Eco-Pads, four wells on one pad in a 1280-acre unit, and two pads (8 pads) in a 2560-acre unit, targeting two formations (the Bakken and the "Three Forks Sanish").

Hess is trying something a bit different with six laterals targeting three formations (hunch) on a 2560-acre unit.

99

A new record for number of active rigs in North Dakota: 99.

The previous high was 98 (yesterday); 97 ( a few weeks ago), 96 (a few days before that), 95, earlier this year .... and 95 tied the previous record of 95 set in late 2008. When the price of oil plummeted, the number of active rigs dropped to 33 in early- to mid-2009.

Some opine that there will be as many as 120 active rigs in North Dakota by this summer. It might happen. Despite a glut of oil on the market, oil is nearing $82 -- of course, this has less to do with supply/demand than with the strength of the dollar. However, we may be seeing glimpses of untethering the price of oil and the strength of the dollar: oil jumped almost $2.00 in early trading today despite the fact that gold has NOT moved, and there is increasing talk of sovereign defaults (Greece, Portugal, Spain) putting pressure on the Euro and strengthening the dollar.