Whiting Bakken Production Hits Record Levels in Second Quarter

August 1, 2014 Kirk Eggleston

Whiting Petroleum reported record Bakken/Three Forks production of 80,195 boe/d in the second quarter of 2014. The data was released in the company's second quarter report, and represents a 33% increase in production year-over-year. Bakken/Three Forks production counted for 73% of the company's total production across its portfolio. Currently the company holds 1,059,957 gross (674,162 net) acres in the Williston Basin in North Dakota and Montana. Whiting Petroleum recently announced the acquisition of Kodiak Oil & Gas, in an all stock transaction, for $3.8 billion. The deal makes the combined company the largest Bakken/Three Forks producer, unseating Harold Hamm’s Continental Resources from the top spot.

“Whiting CEO James Volker said in a prepared statement, “we believe we have plenty of running room in theWilliston Basin, particularly in light of our new completion techniques and downspacing programs.”

Whiting Bakken Well Completions Benefiting from Cemented Liners

According to company officials, recent results using cemented liner completions in Whiting's Hidden Bench field have been particularly strong. The 11 wells completed in the second quarter using cemented liners had an average initial production (IP) rate of 2,872 boe/d, a 50% increase over the average of the company's Hidden Bench wells completed with sliding sleeve technology.

Whiting Bakken First Slickwater Frac Job

Whiting's first slickwater frac job, the Sundheim 21-27-1H well at the company's Missouri Breaks field in McKenzie County, North Dakota, was completed on August 24, 2013. It had a 120-day production rate of 374 boe/d, which was 44% greater than an offsetting well, which was completed using an uncemented liner and sliding sleeve technology. Currently the company has 11 slickwater fracs either underway or planned for the third quarter of 2014 at the Missouri Breaks, Sanish, Hidden Bench and Pronghorn fields.

SM Energy Grabs 61,000 Bakken Net Acres - $330 Million

July 30, 2014 Kirk Eggleston

In late July of 2014, SM Energy announced it will acquire approximately 61,000 net acres in Divide and Williams Counties for $330-million from Baytex Energy. The acreage is directly adjacent to the company's Gooseneck focus area. Upon closing, the company will have ~97,000 acres in the area.

Company officials say the acquisition is expected to add significant drilling inventory, and includes interests in 126 drilling spacing units, 81 of which will be operated by SM Energy. Net production from the acreage is ~3,200 boe/d (91% oil, 1,500 BTU rich gas). The properties are 90% operated and approximately 70% held by production. Working interest for operated spacing units is expected to range between 37.5% – 50.0%

Directly adjacent to the acquisition area, SM Energy noted improvements in its Three Forks program recently due to faster drilling times and improved completions. Current data reflects recent wells have higher sustained production rates than older wells.

The transaction has an effective date of July 1, 2014, is expected to close by the end of the third quarter of 2014, and is subject to customary closing conditions and adjustments. The Company expects to fund the acquisition with cash on hand and borrowings under its existing credit facility.

DOT Seeks New Rail Car Design and Bakken Crude Testing

July 25, 2014 Kirk Eggleston

The US Department of Transportation (DOT) proposed new rules this week for the testing of Bakken crude and better designed rail cars.

Within two years, the DOT proposes phasing out older DOT-111 tank cars for the shipment of packing group I flammable liquids. Unless the current DOT-111 and CPC-1232 tank cars are retrofitted to comply with new tank car design standards, they would not be approved for use in the transport of Bakken crude, which falls into the group I flammable liquids category.

In addition to the new tank car standards, new operating procedures like braking controls and speed restrictions for trains classified as high-hazard flammable trains were proposed. Also included in the DOT's recommendations, a new liquids and gas testing program to address the following:

frequency of sampling and testing;
sampling at various points along the supply chain;
sampling methods that ensure a representative sample of the entire mixture;
testing methods to enable better analysis, classification, and characterization of material;
statistical justification for sample frequencies; and,
duplicate samples for quality assurance.

PHMSA/FRA Report Finds Bakken Crude is More Volatile

In conjunction with the new proposed rules, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released a report summarizing the analysis of Bakken crude oil data gathered by PHMSA and the Federal Railroad Administration (FRA) between August 2013 and May 2014. According to the report, data show that crude oil from the Bakken region in North Dakota tends to be more volatile and flammable than other crude oils.

By contrast, in May of 2014, The American Fuel & Petrochemical Manufacturers (AFPM), an industry trade association, released findings from a study that examined the characteristics of Bakken crude oil. In their report, the AFPM claims Bakken crude is within the safety standards for current rail car designs (DOT 111 tank cars), and is comparable to other light crudes.

Lightning a Threat to Salt Water Disposal Tanks

July 23, 2014 Kirk Eggleston

As a result of Bakken development, a number of salt water disposal facilities have popped up throughout North Dakota and Montana.

Highly saline water or brine is a byproduct of the drilling process, and must be disposed of properly.

Lightning a Threat to Salt Water Disposal Tanks

At disposal facilities, brine and oil residue are stored in tanks, where the oil is skimmed off the top, and then brine is injected into the ground. This necessary practice has come under fire - literally - from lightning strikes. Since the Bakken boom began, lightning has been linked to the cause of multiple fires involving salt water disposal tanks, according to officials.

Salt water disposal tanks, which are generally constructed of fiberglass, are more prone to catching fire if struck by lightning. The reasons tanks catch fire experts say are because of the volatile gasses that collect in them from the oil residue mixed in with the brine and their fiberglass and other construction components.

What's the Solution?

The logical answer it seems would be to build the tanks out of more lightning resistant material, however, industry experts caution that isn't cost effective. For instance, steel tanks, which would be better suited to a lightning strike, are subject to the corrosive nature of the brine. Fiberglass tanks are much better suited to corrosion, and last longer.

Another more cost effective solution is to fortify the fiberglass tanks to make them resistant to lightning strikes. These fortifications are costly, but not nearly as costly compared to the damage caused by a direct hit from a lightning strike.

Despite the risk, some companies in the Bakken oil patch are willing to hedge their bets that a lightning strike will not hit their storage tank. But the simple truth is lightning wins the match every time when it hits a susceptible tank.

Read more on this subject at oilpatchdispatch.areavoices.com

North Dakota "Man-Rush"

July 18, 2014 Kirk Eggleston

The so-called "Man-Rush" is on in North Dakota, thanks to the development of the Bakken Shale formation.

Since the beginning of the boom in 2009, the number of men in North Dakota has jumped 14% (46,000), according to the U.S. Census Bureau. Overall, the state's population has grown 12% during the same time frame, but men have accounted for two-thirds of that growth. The population of women has grown as well, but only by 9% (30,000).

Most North Dakota Jobs in Oil & Gas Industry Held by Men

Most of the Jobs in North Dakota's burgeoning oil and gas industry are held by men. The primary reason for that is because much of the work involves hard manual labor jobs traditionally held by men (i.e. deckhand, roughneck, roustabout, pipe-fitter, etc.).

Loding Options Catered to Men

Some Lodging options are even referred to as Man Camps, which are specifically designed to host large numbers of oilfield workers. Recently, Target Logistics, a Boston-based builder and operator of housing projects primarily for the energy industry, secured a 30-million contract to provide lodging for Bakken Shale oilfield workers over the next three years.

Read more: New Bakken Man Camp Coming Soon

To read more about the North Dakota "Man-Rush", and see how it compares to other booms, Click Here to view a study released by the Pew Research Center.