Are Bakken DUCs A Big Deal? -- December 27, 2015

Disclaimer: in a long note like this, there will be typographical and factual errors. If this information is important to you, go to the source.

A couple of days ago I posted a poll asking whether "Bakken DUCs are a big deal?"

I had planned to write about DUCs awhile ago but have decided to put that discussion off. I feel I need at least one more month of data -- which we won't get until mid-January, 2016, when the next Director's Cut comes out, with the November, 2015. Production data should be available prior to the publication of the Director's Cut.

At that post I linked a New York Times article on DUCs.

Today, I'm just going to post some observations, keeping comments to a minimum:

Worksheet (explanation below the worksheet):

Month/Year	Producing Wells	Delta	Average	Bbls/Well	Average	Active Rigs
January 2013	5166	118		4048
	5318	152		3775
	5469	151		4093
	5621	152		3883
	5738	117		4034
	5900	162		3860
	6108	208		4111
	6308	200		4166
	6455	147		4040
	6657	202		4099
	6790	133	158	4034
December 2013	6840	50	149	3925	4006	187
January 2014	6944	104		3905
	7066	122		3527
	7250	184		3906
	7469	219		3771
	7685	216		3934
	7868	183		3919
	8064	196		4040
	8289	225		3994
	8500	231		3951
	8620	120		4021
November 2014	8730	110		3864
	8947	217	177	4032	3905	173
January 2015	9051	104		3865
	9168	117		3412
	9421	253		3716
	9529	108		3492
	9709	180		3645
	9912	203		3489
	10044	132		3549
August 2015	10115	71		3466
	10158	43		3268
	10298	140	135	3353	3526	62

This table includes only Bakken wells in North Dakota as defined by the NDIC 

• The most recent data available is October, 2015
• I believe the NDIC announced the one-year extension to complete wells was in November, 2014
• As of October, 2015, there were 10,298 Bakken producing wells 
• There are currently about 10,500 producing Bakken wells
• Average production per well, in round numbers, column 6:

• in 2013, Bakken wells produced on average 4,000 bbls/month
• in 2014, Bakken wells produced on average 3,900 bbls/month
• for most of 2015, Bakken wells averaged 3,500 bbls/month

• Average change in number of Bakken wells month-over-month, column 4: 

• 2013: 149
• 2014: 177
• 2015 to date: 135

The change in the number of producing wells is a combination of new wells coming on line (including previous wells taken off-line for some reason) and older wells being taken off-line. 

Note: in column 4, the averages are for the calendar year. For 2013, there are two averages provided. For the first 11 months, the average change in the number of wells month-over-month was 158 (December, with only 50 new wells was an anomaly, so I wanted to see the average without December's data; the average for the year -- all 12 months, including December -- was 149 more wells on average month-over-month).

When looking at the monthly production/well, remember this incredibly important point: in 2013, they were drilling across the entire Bakken. In 2015, drilling had shifted to the best spots in the Bakken. Average production has decreased about 500 bbls/month/well in 2015 compared to 2013.

Some other observations:

• in 2013, when they were drilling "all-out," the average number of producing wells increased by about 150 wells month-over-month; the number of active rigs: 180
• in 2015, when the severe plunge in the price of crude oil had continued, the average number of producing wells increased by about 135; the number of active rigs: 65
• when one throws out the two anomalous months in 2015 (August and September), the average number of producing wells increased by about 155 wells month-over-month

Disclaimer: in a long note like this I may have made simple arithmetic errors. In addition, there may have been errors in transcribing data from the NDIC source to my worksheet. If mistakes are noted, they will be corrected. Do not use this information if this is important for you. If this is important for you, go to the source.

So, maybe one can add this information to the question whether DUCs are a big deal.

By the way, here's another look at DUCs. Take a look at Robinson oil field, a fairly active field over the past few years. The data goes back to 2010, and the list is up-to-date (although total production for all wells has not been updated).

One can quickly scroll down the list. IPs in bold blue are wells that are currently DUCs or were DUCs at one time, and have since been completed. Some DUCs will have been missed. When next month's data comes out, some (many? most?) of the wells currently on conf status will go to DUC status.

You might note the Sinclair well back in 2013 that is a DUC. What gives? 2013 was well before the November, 2014, date when an extension for well completion was approved. That Sinclair well was permitted in 2013, but was not spud until February 2, 2015; it reached total depth February 27, 2015, but it is now a DUC (has not been fracked). This will be a good well to follow. Although it is on DUC status, it will be interesting to see if the well is completed within a year of spud (February, 2016); if not, how soon after.

Another active field one can look at is MRO's Bailey field to get a feel of the prevalence of DUCs. 

Look For Rusty Braziel's New Book On The Shale Revolution -- December 26, 2015

Rusty Braziel, CEO/RBN Energy has a new book out, to be released in early January, 2016, The Domino Effect.

I follow RBN Energy daily and can only imagine how good this book should be, taking off where Daniel Yergin's The Prize ended.

A huge thanks to a reader for alerting me to this book.

When you get to the link, you can actually "look inside" much of the book. A 332-page book for about $20. Interesting.

***********************
Best Christmas Ever!

Our younger daughter got me everything on my Christmas list this year, including the much-talked about, seldom-seen Tesla Model S.

Flashback: Building The 18th Street Underpass Under The "Old" Bypass -- December 26, 2015

Because the Google satellite view of Williston has not yet been updated, it is still possible to get a satellite view of the building of the 18th Street underpass -- under West Dakota Parkway, the "old bypass," US Highway 85, which now separates "old" Williston (on the east side) from "new" Williston (on the west side).

This is the link. This is a dynamic link and I have no idea how long this view will be available. But for those who grew up in Williston in the 60's through the 90's but have since left, this will bring back some memories.

https://www.google.com/maps/place/Williston,+ND+58801/@48.1613925,-103.642111,281m/data=!3m1!1e3!4m2!3m1!1s0x53215b60037038eb:0xe0fc0dfcfeb0f1e3?hl=en

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

A Playlist Without The Beatles

The best single year for music was 1969; the best decade, the 60's.  This is an interesting set -- considering the list does not include the Beatles, Bob Dylan, or the Rolling Stones.

Greatest Music Hits of the 60's

Red River Stony Creek Rail Yard Receives First 100-Unit Train -- Huge Milestone -- December 26, 2015

From a press release: 

This week the first 100 Railcar Unit Train of Sand arrived at the Red River Stony Creek Rail Yard in Williston, ND delivered by the BNSF Railway.

This marks a turning point for Red River’s operations and allows them to better utilize the 5+ miles of track that have been constructed and are currently in place as well as offering a competitive advantage to their customers and thereby generating more jobs in Williston, ND, instead of other possible terminal locations in the Bakken.

“This is a Game Changer for Red River” said Curtis Shuck, Vice President of Business Development.

“It is a good example of how we are continually reviewing and modifying our business model to respond to the needs of our customers in a rapidly changing Oil and Gas Market where at the end of the day, maintaining the lowest landed cost of materials is what our customers are requiring.”

Red River is family owned and has been doing business in Williston, ND since 1978. 

This is really quite a story. This is a family-owned business that has been in Williston since 1978 as the press release indicates. What the press release does not say is that the rail yard was pretty much laid down by a small group of men working day-in / day-out without taking any breaks a couple of years ago, and I assume since then, continuing to add on.

This rail yard is just a miles east of downtown Williston and can easily be seen from the bridge across from the old salt mine.

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

Other Bakken News From The Williston Wire

New Williams County Highway Complex:

Christmas arrived a little early for three groups waiting for the new $22 million Williams County Highway Complex to open. Construction began to wind down in late December, allowing the Williams County Highway and Weed Control Departments and the Williston Vector Control District to begin moving into their new modern and spacious headquarters.  

State population growth leads the nation:

North Dakota is once again leading the nation in population growth, and the number of residents in the state is at an all-time high, according to figures released Tuesday by the U.S. Census Bureau.

The bureau's most recent estimate put the state population at 756,927 in July, an increase of 16,887 residents - or about 2.3 percent - compared to July 2014.

That percentage, far higher than the national average, is largely driven by people in search of jobs in oil-rich western North Dakota.

The state has been the nation's fastest-growing for the past four years, and was followed this year by Colorado, the District of Columbia, Nevada, Florida and Texas, according to the new census data.

Seven states lost population over the same time period, including West Virginia, Illinois and Vermont. [From a google search: Seven states lost population between July 1, 2014, and July 1, 2015: Illinois (22,194 or -0.17 percent), West Virginia (4,623 or -0.25 percent), Connecticut (3,876 or -0.11 percent), Mississippi (1,110 or -0.04 percent), Maine (928 or -0.07 percent), Vermont (725 or -0.12 percent) and New Mexico (458 or -0.02 percent).]