Bakken Well Completions Spike

May 26, 2015 Elizabeth Alford

Bakken well completions rose sharply last month, according to the North Dakota Department of Mineral Resources (DMR). The DMR reports a preliminary completion count for March was 189, up 350% from 42 the previous month.

Related: Bakken Rigs Decrease to 77

Many oil and gas companies who have been hard hit by low crude prices are postponing well completions as a temporary measure in order to wait out the crisis with plans to resume production when oil prices rebound. But oil prices remain unstable, why would North Dakota experience a spike?

Director of DMR Lynn Helms speculates that the increase is likely due to state-mandated time limits and major tax incentives, which forced companies to bring 125 wells online by June to comply with time limits.

Nathan Conway, CEO of Fortis Energy Services, told OAG360 that “In the state of North Dakota, a well can only be left for 12 months after being drilled before it needs to be either completed or temporarily abandoned. Many companies are choosing to complete the wells now rather than plugging them.”

The DMR further reports that at the end of March there were an estimated 880 wells waiting on completion services.

North Dakota Breaks Records for Oil & Gas Activity - Sep. 2014

November 20, 2014 Kirk Eggleston

The State of North Dakota hit 1,184,635 b/d oil in September 2014, setting a new record, according to the Department of Mineral Resources’ (DMR) November Director's Cut. That's 50,000 more b/d than August. During the same month, North Dakota also had record monthly gas production (1,403,448 mcf/d), and reported the highest number of producing wells to date (11,741).

But this month, the state's record breaking oil and gas activity is overshadowed by falling crude oil prices. September was a relatively good month for oil at ~93.00 on average for a barrel of West Texas Intermediate (WTI), but prices have dropped nearly ~$20 in the last two months.

According to the DMR's report, released on November 14, 2014, the current rig count is down 15% in the states five most active counties:

Divide - down 54%
Dunn - down 29%
McKenzie - down 4%
Mountrail - down 24%
Williams- down 19%

DMR Director Lynn Helms blames the recent drop in the Bakken rig count directly on lower oil prices. The cost of drilling a Bakken well is high - anywhere between $8-million to $9-million. If the price of oil continues to fall, some producers, depending on their location in the play and a host of other factors, will scale back their Bakken drilling programs.

Flaring Down in North Dakota Bakken

The natural gas flaring rate dropped from 27% in August to 24% in September. By comparison, the highest flared percent of natural gas was 36% in September of 2011.

New regulations have called for producers to reduce flaring to below 26%, starting with their October production figures. Helms recently pointed out that in addition to lower oil prices, flaring regulations could also impact Bakken development, because producers may face production restrictions if they fail to meet the new standards.

Beginning on June 1st, the North Dakota Industrial Commission (NDIC) began implementing its first in a series of policy changes aimed at reducing flaring in the Bakken.

Seismic Activity Up in North Dakota Bakken, But Leasing is Down

Seismic activity is up with seven surveys active or recording and five permitted. New leasing on the other hand has dropped off sharply. Most leases consist of renewals and top leases in the Bakken - Three Forks area.

Bakken Development Threats on the Horizon?

October 9, 2014 Kirk Eggleston

The Bakken is one of the most lucrative plays in the country, but there are some looming concerns for development. The good news is production growth is expected to continue.

New York City, NY-based financial information services company Fitch Ratings, Inc. published its “Bakken Shale Report” this week, which found the play had the highest oil cut among U.S. shales at 85%.

Oil production has been above 1-million b/d since April of 2014, according to the Department of Mineral Resources (DMR), and officials expect production to grow to 1.3-million b/d by 2015.

“The primary challenge for upstream companies has been to balance gains from increasing production and drilling efficiencies with strained takeaway capacity,” according to Fitch Ratings.”

The Fitch report found Bakken crude averaged ~$10 per barrel below West Texas Intermediate (WTI) in 2014, and rail is estimated to provide 60% of regional takeaway capacity and costs to ship affected spread levels.

This week, the price of Bakken crude fell to ~$73, which spurred conversation online about lower oil prices and how that could impact Bakken development. On Wednesday, North Dakota's Department of Mineral Resources Director Lynn Helms updated lawmakers on the status of oil & gas development in the state. Helms said two factors could negatively impact oil production - lower oil prices and new flaring regulations.

Beginning on June 1st, the North Dakota Industrial Commission (NDIC) began implementing its first in a series of policy changes aimed at reducing flaring in the Bakken.

The NDIC’s new “gas capture plan” (GCP) rule will require E&P companies to submit a document with their application for a permit to the commission specifying how they plan to capture gas produced from their drilling operations.

According to Fitch research, a large increase in Bakken production has disrupted traditional supply and demand balance in the region, and while pipeline capacity has struggled to keep up with volumes, Fitch expects supply and demand will begin to come more into balance in 2015 and 2016 as market participants strive to find the most economic placement for their barrels.

North Dakota Hits Record Oil & Gas Production - June 2014

August 20, 2014 Kirk Eggleston

The State of North Dakota hit nearly 1.1-million b/d oil in June 2014, setting a new record, according to the Department of Mineral Resources' (DMR) August Director's Cut. During the same month, North Dakota also had record monthly gas production (1,253,154 mcf/d), and the highest recorded number of producing wells (11,079).

In April, North Dakota crossed the milestone 1-million b/d oil mark. The Bakken region, which includes portions of western Montana, exceeded the 1-million b/d mark at end of last year according to the Energy Information Administration (EIA). It is the fourth region, along with the Gulf of Mexico, Eagle Ford, and Permian basins, producing more than 1 million b/d in the nation.

About 28% of gas produced in May and June was flared, despite the completion of Hess' Tioga Gas Plant expansion in May 2014. DMR officials noted the plant has been operating below full capacity due to the delayed expansion of gas gathering from South of Lake Sakakawea.

The expansion project, which is part of a $1.5 billion investment Hess has made in the area for infrastructure improvements, began processing about 120-million standard cubic feet of gas per day (mmscf/d) in May, according to Hess. The company expects the plant will process at least 250 mmscf/d with the potential to increase beyond 300 mmscf/d.

Highlights from August 2014 Director’s Cut

May Oil – 1,040,469 b/d
June Oil – 1,092,617 b/d
May Gas – 1,192,860 mcf/d
June Gas – 1,253,154 mcf/d
May Producing Wells – 10,902
June Producing Wells – 11,079
28% of produced gas in May and June flared

North Dakota Hits the 1-Million b/d Mark

June 18, 2014 Kirk Eggleston

The State of North Dakota has surpassed the 1-million b/d oil mark according to the North Dakota Industrial Commission's (NDIC) Department of Mineral Resources (DMR), thanks mostly to the Bakken Shale and Three Forks formation.

The preliminary data, released in the monthly Director's Cut in June of 2014, revealed April oil production was 1,001,149 b/d. North Dakota is second only to Texas for oil production.

It's certain poor weather conditions at the end of 2013 and the beginning of this year prevented the production milestone from being hit sooner. According to North Dakota officials, in the month of February, there were 18 days with temperatures five or more degrees below normal. Four days were recorded where wind gusts were too high for completion work. Despite the poor weather, the state set a new record for the number of producing wells (10,186) in February. In April, North Dakota broke that record again, with 10,658 producing wells. By contrast, at the onset of the shale revolution in 2008, the state only had ~3,600 producing wells.

The Bakken region, which includes portions of western Montana, exceeded the 1-million b/d mark at end of last year according to the Energy Information Administration (EIA). It is the fourth region, along with the Gulf of Mexico, Eagle Ford, and Permian basins, producing more than 1 million b/d in the nation.

In April of 2014, Continental Resources, the Bakken's largest producer, cited IHS data revealing the Bakken field of North Dakota and Montana reached another milestone of 1 billion bbls of cumulative light, sweet crude oil produced during first quarter of 2014. According to Continental officials, two-thirds of the oil has been produced since 2011.

Highlights from June 2014 Director's Cut

Mar Oil - 977,178
Apr Oil - 1,001,149 b/d
Mar Gas - 1,085,631 mcf/d
Apr Gas - 1,133,742 mcf/d
Mar Producing Wells - 10,472
Apr Producing Wells - 10,658
ND leasing activity is low consisting mostly of renewals and top leases in the Bakken - Three Forks area