Bakken Sweet Spots are Petering Out

23 11 2014

Ron Patterson

Reblogged from Ron Patterson’s Peak Oil Barrel site Posted on

I’m so glad there are people out there who have access to the data and know how to interpret it so plebs like us can understand what is really happening in the world of Peak Oil…..

The Bakken, as well as other shale oil areas, is not one homogeneous area where equal amounts of can be found. David Hughes in DRILLING DEEPER puts it this way, though here he is talking about gas wells, the same applies to oil wells:

All shale gas plays invariably have “core” areas or “sweet spots”, where individual well production is highest and hence the economics are best. Sweet spots are targeted and drilled off early in a play’s lifecycle, leaving lesser quality rock to be drilled as the play matures (requiring higher gas prices to be economic); thus the number of wells required to offset field decline inevitably increases with time.

However the Bakken, at least through the September North Dakota Industrial Commission  production report, has given no real indication that the Bakken is even close to peaking. But a closer look at the data makes me believe that is all about to change.

The NDIC issues a Daily Activity Report where they list permits issued as well as wells completed and wells released from the tight hole confidential list. These reports usually, but not always, also give the number of barrels of oil per day and barrels of water per day for the first 24 hours of production.  I have gone through every day, back to November 1st, 2013 and collected the data on every well listed that gives production numbers and copied that data to Excel. In that one year and three weeks I have gathered the data form every one of the 2,171 wells that give production numbers. Sorting these wells by well number, which is the original permit number, gives some startling results.

ND 200 Well Avg

To smooth the chart I created a 200 well average of barrels per day per well. The first point on the chart is therefore the average to the 200th well, #23890 and the last point is the 200 well average to the 2171st well, #28971. As you can see there has been a continuous, though erratic, decline in first 24 hour production as the well numbers increase.

ND Prod per 1000

Breaking this down according to well numbers we see production peaked with the 2400s and have steady decline since. Every group of well numbers do not contain the same number of wells.

Well Numbers BOPD       Number of Wells in Sample
18s – 22s              1,235                81
23000s                1,362               134
24000s                 1,497               285
25000s                 1,320              676
26000s                 1,198              591
27000s                 1,016              361
28000s                   841                40

ND Barrels per Well

The above chart is monthly first 24 hour production per well and first 24 hour percent water per well of all wells that the NDIC listed production numbers. The November 2014 numbers are only through November 21st.

Note: The first 24 hours of production is far from being the average first years production. And though all wells are different I am relatively sure there is an average conversion rate but I have no idea what it is. I would guess it is somewhere between one quarter to one third of the first 24 hours of production. But if anyone has any idea what the average conversion factor is, if one exists, please email me at DarwinianOne at Gmail.com, or post it in the comments section of this post.

North Dakota issues drilling permits in sequential order. But those permits are not drilled in sequence. Drillers will often sit on a permit for two to three years, renewing then as the law requires.

A list of all active drilling rigs, the well number they are working on and the date they started can be found at the NDIC’s Current Active Drilling Rig List They are listed according to their API number but the list can be copied and pasted into Excel and sorted according to your wishes.

Well List

Of the 191 rigs working, 39 or 20% are working well numbers below 28000. 76 or 40% of rigs are working well numbers in the 28000s. And 76 or 40% are working well numbers in the 29000s. Permit #28000 was issued on March 26. 2014. So 80% of all rigs are working on recently issued permits.

As of November 21st, the highest well number completed was #28971. The highest number well currently being drilled is #29908. The highest permit number issued is #30076.

Will enhanced oil recovery keep the Bakken going into the future. A simple one word answer is “no”, as this article explains.

Enhanced oil recovery techniques limited in shale

Energy companies currently leave about 95 percent of the crude in the ground at today’s unconventional oil wells, but they face major technological challenges in boosting recovery rates, a Schlumberger scientist said Tuesday…

“Our entire spectrum of secondary recovery methods don’t work,” Kleinberg said, in a sobering talk at the Energy Information Administration’s annual summit in the nation’s capital.

Water flooding — where water can be swept from separate injection and producer wells — isn’t an option because the tight oil formations are too dense to permit those water flows.

And while carbon dioxide can be used to pressure up a conventional oil well, there’s currently a limit on the amount of that gas that is available to pump underground. “The oil industry would like to have more CO2, which is a great way to get more oil out of the ground, but there are limits on affordable, accessible supplies of CO2,” Kleinberg said, quipping: “The oil industry lives in a CO2 constrained world; it is only the oil industry that thinks there is not enough carbon dioxide.”

In conclusion, first 24 hour production per well, when measured by well number, has dropped by 40 percent since peaking in the 24000s. This, to me anyway, clearly indicates that the sweet spots are playing out and companies are now drilling on less productive acreage. I now believe that North Dakota production will peak no later than 2015 with a high probability that 2014 will prove to be the peak year.

Note: I send an email notice when I publish a new post. If you would like to receive that notice then email me at DarwinianOne at Gmail.com.

 

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4 responses

23 11 2014
lockyervalley

Really great stuff Mike. Never mind that you don’t have access to the raw data or the skills to interpret it – you are doing a great service to all of us by finding and pointing to these analyses.

23 11 2014
mikestasse

Thanks Gordon…..

23 11 2014
davekimble3

Is the first 24 hours of production a good proxy for what really matters – the ultimately recovered resource from the oilfield? Presumably some holes produce slower and longer, while some produce faster and shorter, depending on how successful the fracking has been at exposing surface area in the hole. You would have to model a representative range of declines curves for different oilfields, and follow them over time to get the full picture.

Other factors would have an influence too, like how much demand there is for the oil, and of course the price buyers are willing to pay for it. The recent price drop will undoubtedly persuade some drillers not to drill so many holes so quickly. If a company has the drilling leases already, and contracts in place with the drilling subcontractors to use X rigs for the next Y months, they may well find it sensible to keep drilling, where others would stop or slow down.

Access to finance to pay for drilling, and the overall indebtedness of individual businesses will alter this. The risk implicit in a gung-ho attitude will catch some players out, and defaulting players will raise risk premiums for the rest. So the geological limits may not be the determinating factor.

23 11 2014
Batalos

That’s a great possibility to be a witness of the dawn of the civi…
I’m sure that was a common case in our enthropic Univercity though
homo should knoe better than nursing animal instincts

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