Bakken Production Expected to Decline

Bakken Production Will Decline in May
Bakken Production Will Decline in May

For the first time since the Energy Information Administration (EIA) began tracking drilling productivity, the agency reported on Monday that oil and gas production will decrease for the Bakken and other shale formations across the country.

Shale production has been a major player in boosting US output to more that 4 million bpd and has played a key role in the collapse of oil prices worldwide in 2014.

Production from the Bakken formation has increased 28% year-over-year despite declining rig counts across the area.

Related: Record Production for Bakken

The EIA estimates that the Bakken will experience a decline of 23,000 barrels of oil a day to 1.3 million in May. Natural gas will also decline by 21 million cubit feet per day.

Speaking with Bloomberg, Carl Larry, head of oil and gas for Frost & Sullivan LP said, “We’re going off an inevitable cliff because of the shrinking rig counts. The question is how fast is the decline going to go. If it’s fast, if it’s steep, there could be a big jump in the market.


Whiting to Reduce Bakken Rig Count

Whiting Bakken Acreage Map
Whiting Bakken Acreage Map

In its fourth quarter earning report, Whiting Petroleum announced a record 2014 and revealed a 2015 spending plan that includes reducing Bakken rig count.

In spite of low crude prices, Whiting ended the year with a Q4 profit of $58 million with cash flows totalling $419 million. Oil production was at record numbers for both the quarter (up 13%) and the entire year, which averaged 41.8 MMBOE and was up 22% over 2013.

Related: Whiting Bakken Production Hits Record Levels in Second Quarter

In July of 2014, Whiting Petroleum announced plans to acquire Kodiak Oil & Gas for $3.8 billion. The deal made the combined company the largest Bakken/Three Forks producer, unseating Harold Hamm’s Continental Resources from the top spot.

Read more: Whiting Petroleum Acquires Kodiak Oil & Gas – $3.8 Billion

James J. Volker, Whiting’s Chairman, President and CEO, commented, “2014 was a strong year for Whiting. We set records in production, proved reserves and discretionary cash flow. In the wake of our acquisition of Kodiak Oil & Gas, we became the largest Bakken/Three Forks producer in the Williston Basin.Our 2015 capital budget of $2.0 billion reflects a disciplined approach to maintaining our financial strength while preserving our long-term growth plans.

2015 Spending Plan

Looking to the new year, Whiting plans for the following:

  • Reduce its capital budget to $2 billion
  • $1.8 billion of the 2015 capital budget will go towards exploration and development activity
  • $59 million is allocated for land and $123 million for facilities
  • Production forecast of 59.0 MMBOE, an increase of 42% over 2014
  • Reducing Bakken rig count from 16 to 10
  • Completed well cost in the Bakken will average $7 million, down from $8.5 million in 2014

Read the full report at

Record Production for Bakken

Record Productivity in Bakken
Record Productivity in Bakken

Despite declining rig counts across the country, oil production remains at record levels and is currently exceeding demand.

Related: Bakken-Three Forks rig count

According to the Energy Information Administration (EIA), US oil production hit a record 9,226,000 barrels per day last week, with production from the Bakken formation up to an average of 1.2 million barrels a day, a 28% year-over-year increase.

This record production is contributing to an international surplus and keeping crude prices low. It is estimated that oil supply is exceeding demand by over one million bbl/d in the global market.Inventories for U.S. commercial crude oil increased by 4.9 million barrels this week.  At 417.9 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Consumption grew by 0.9 million bbl/d in 2014, averaging 92.1 million bbl/d for the year. EIA predicts global consumption to grow by 1.0 million bbl/d in both 2015 and 2016 and global oil inventories to continue to build in 2015.

CNBC recently reported that, “The decline in the US rig count likely remains well short of the level required to slow US shale oil production to levels consistent with a balanced global market. Lower oil price will be required over the coming quarters to see the US production growth slowdown materializes.

Continental Resources Bakken Production Up 11% in Q2 2014

Continental 2014 Production
Continental 2014 Production

Continental's Bakken production totaled 108,573 boe/d (North Dakota: 94,702 boe/d, Montana: 13,871 boe/d) in the second quarter of 2014. That's an increase of 11% quarter-on-quarter and 23% year-over-year.

During the quarter, the company completed 224 gross (93 net) wells in the Bakken, and finished the reporting period with an inventory of approximately 84 gross operated (66 net) Bakken wells drilled, but not completed. The second quarter drilling inventory numbers are down from 100 gross operated wells drilled, but not completed at the end of the first quarter of 2014.  Continental expects to complete approximately 870 gross (287 net) wells in the Bakken in full-year 2014, including both operated and non-operated wells.

Read moreContinental's Proved Reserves in Bakken Valued at $14.5 Billion - 2013

Continental Bakken New Completion Techniques Employed

The company continues to modify completion techniques. During the quarter, Continental conducted three slick water completions in an unspecified geological area of the play, which company officials say resulted in an average early cumulative production increase of 35% higher than the production trend for the company's 603,000 BOE estimated ultimate recovery (EUR) model for North Dakota. Additionally, in the same geological area, early production was also stronger for three wells completed with increased proppant volumes, which averaged between 200,000 to 300,000 pounds of proppant per stage.

COO Rick Bott, said, “we’re pleased with several of the new completion methods we are testing and early results show significant improvements in well performance. We are studying the broader implications of applying enhanced completions across the play.

Continental Bakken Well Tests Update

In 2013, Continental began testing different areas across the Bakken field to determine the optimum well density and pattern for maximizing recovery and returns.  So far, the company has initiated seven density pilot projects, all designed to include the Middle Bakken ("MB") and Three Forks One, Two and Three across the company's approximately 1.2 million net acres of leasehold.

Three of these projects are testing 1,320-foot inter-well spacing and four are testing 660-foot inter-well spacing. Four of the projects have already been completed. Company officials indicate positive results from the first completed 660-foot inter-well spacing test:

  • Wahpeton (660 ft test); Initial Production (IP) rate for 12 wells in unit - 1,015 boe/d; IP rate for three MB wells in unit only - 1,730 boe/d

Three more projects testing the 660-foot inter-well spacing are in various stages of drilling or completion. The new wells are expected to be completed in the second half of 2014.