The Midland, Texas, Folks Are Preparing For Another Boom

For newbies: active drilling will be necessary through 2030 to drill 48,000 wells to exhaust the Bakken (with today's technology and today's estimates). Production from the Bakken will continue through 2100.

The Permian is estimated to be several times bigger than the Bakken (although some will disagree with the "several times").

The Permian is just beginning. Production is enormous.

The oil and gas industry is well known to go through boom and bust cycles.

North Dakota reports a new record yesterday: > 900,000 bbls of crude oil being produced daily.

Read the following story, in that context, and note the byline (Midland, Texas), being reported by The Dickinson Press:

MIDLAND, Texas — In a faded West Texas town dotted with vacant buildings and potholed streets is a sparkling storefront window and a curious display: rows of diamond-studded Rolex watches, awaiting buyers whose pockets are packed with oil money.

The surge in oil drilling has drawn money and men like a magnet to run-down communities that haven’t seen a boom since the 1980s.

But leaders and residents here are increasingly mindful that the runaway riches tapped by hydraulic fracturing will eventually run out. And they are determined to live by a fondly remembered bumper sticker from the last bust: Please, God, give me another oil boom and I promise not to blow it. So some towns are taking steps to ensure they land softly rather than crash into economic ruin.

The Permian (Midland, Texas) is getting ready for another boom.

The US is now #1 in the world -- repeat, #1 in the world -- for producing oil and gas.

I believe the US is now out-producing Saudi Arabia, and will soon out-produce Russia in oil, making the US the #1 crude oil producer in the world.

With that in mind, recall our first nominee for the 2013 Geico Rock Award. The graph at this link might help put things into perspective.

Hyperbole

The number sounds big, but for North Dakota, it is trivial and insignificant.

The Dickinson Press is reporting:

The Bureau of Land Management’s North Dakota office is sitting on more than 500 oil and gas drilling permit applications, the White House told Sen. Heidi Heitkamp’s office this week.

The BLM, which processes permits to drill on federal land, has furloughed more than 10,000 employees since the government shut down Oct. 1.

Unless I missed it the article does not break down how many of these permits affect North Dakota; this is a national number. North Dakota alone will process almost 3,000 new permits this year.

According to yesterday's Director's Cut, there are no operators drilling in North Dakota's BLM-managed "grasslands."

I have blogged from the beginning that operators like XTO and KOG are heavily involved in the reservation, in Dunn County, and permits continue to be issued for fields in the reservation. 

Operators outside of North Dakota affected by this shutdown may, in fact, move their rigs to North Dakota. Except for the fact that the shutdown will be history by the end of the week.

Some Observations On The IPs Reported Today; Simply Rambling While Watching It Rain

Some observations on the IPs reported today:

OXY USA reports an OXY USA IP.

Slawson has a "high IP" well that makes the "high IP" list.

EOG reports another nice middle Bakken well in the Clearwater field using 48 stages, 10 million pounds of sand; IP was low, but production is outstanding. On the other hand, in Spotted Horn, EOG used 51 stages and 10 million pounds of sand in a Three Forks well, and early production is not particularly good. [See first comment: there may be a good explanation.]

A fairly inactive field in the Bakken, the Bully field south of Watford City, is showing some nice activity and some nice results.

Shell Pessimistic On Shale Oil And Gas Development Outside The US; National Review Feature Story On Harold Hamm

Reuters is reporting via the Rigzone:

Royal Dutch Shell CEO Peter Voser said it will take a longer time than expected for the company to reap benefits from its shale gas projects due to poor short-term results.

Weak U.S. shale liquids production contributed to a $2.2 billion charge Shell revealed in August and was a key factor in its decision to abandon its goal to deliver 4 million barrels a day of production by 2017.

"We didn't get the results which we were expecting to get in the shorter term and we will therefore have to develop this a little bit more before we can take benefits from it," Voser told reporters on the sidelines of the World Energy Congress. "It was clearly not as successful as thought."

Vast reserves of shale oil and gas are likely to make the United States the largest oil and gas producer in the world this year, according to the U.S. Energy Information Administration, but the rush to cash in on the shale bonanza has cost some latecomers to the market dearly.

Voser was also sceptical about the success of shale development elsewhere.

I believe the US EIA has already reported that the US is #1 in oil and natural gas (together), and I believe soon to be #1 in oil production, by itself, later this year. I forget the specifics. Hardly matters.

This speaks volumes about Harold Hamm being early in the Bakken. The National Review has a feature article on Harold Hamm, posted in the October 28, 2013, issue. A big "thank you" to a reader for sending me the link.

By the way, if I recall correctly, another reader pointed out that the company owned by Harold Hamm produces more oil on a daily basis than what the state of Oklahoma produces on a daily basis. Just saying.

It Could Be Close --

Reuters is reporting, via Rigzone: 

Oil production in North Dakota, home to the prolific Bakken formation, could hit 1 million barrels per day (bpd) as early as at the end of this year, the head of the state's Mineral Resources Department said on Tuesday.

Data issued by the department on Tuesday showed production rose 35,000 bpd in August to more than 910,000 bpd, a fresh all-time high that far exceeds an official forecast used by the state's budget of 850,000 bpd by the end of the year.

"We moved through 900,000 bpd in August. It was just in May that we hit 800,000 bpd. That tells us that at the end of this year or very early next year we will see 1 million barrels," Lynn Helms, head of the department, said on a conference call. Helms forecast "a fairly good-sized surge" in production in September because a number of wells that were to be completed had to be delayed from August due to drillers falling behind and rain.

It will take a great November report to get us to one million bbls of oil per day.