Continental Resources to Start Fracking Again

Bakken super-producer, Continental Resources, announced that crude prices are finally within a good range for them to move forward with well completions. 

Related: Continental Sidelines Bakken Rigs

Founder and CEO Harold Hamm told Bloomberg this week that new drilling in the Bakken won't take place until crude prices pass the $60 before mark. But encouraged by the recent increases, the company will move forward to complete their backlog of wells that still need to be fracked.  

In late 2015, Hamm announced that Continental would join other producers to sideline their rigs in the Bakken. There are currently 24 running rigs in the Bakken Three Forks region, down from 54 in December. These drilled but uncompleted wells (DUC) have remained dormant as Hamm and others waited out the prices. 

“Peter Pulikkan of Bloomberg referred to Lynn Hems data when he said “Most Bakken shale drillers will start completiing their backlogs of unfinished wells when crude reaches $55-$60 range.””

According to North Dakota's energy agency, at the end of 2015 there were 4290 DUCS in the U.S. and Continental had 945 of them. . 

Continental Resources reduced their 2016  capital spending to just $920 million, down from $2.7 billion last year. They predict this large cut will lead to production of around 205,000 barrels to 215,000 barrels of oil equivalents per day in 2016, down from 221,700 boe per day last year. 

Read more at Bloomberg.com

 

Derailed Bakken Oil Car Met Regulations

rails

A train carrying Bakken crude that derailed earlier this month, was following North Dakota regulations.   

Related: Crude by Rail Under Attack

On June 3rd, 11 cars of a Union Pacific train jumped the tracks near the small town of Mosier Oregon, sparking a fire and releasing oil  near the Columbia River. Federal Railroad Administration officials are now saying that the oil on the train met North Dakota’s oil conditioning standards.

The North Dakota Department of Mineral Resources requires that companies remove the most volatile gases from their crude before transport, limiting the vapor pressure to 13.7 pounds per square inch. The oil on the most recent crash recent had a vapor pressure of 9.2 pounds psi.

Bakken oil is produced at a high quality that makes it easier to refine into commercial products and makes it easier to ignite. Light oil production growth in the Bakken isn’t something the industry has never handled before, but the Bakken boom is bigger than anyone expected. As a result of lack of pipelines and additional infrastructure, nearly 70% of all Bakken crude is transported by rail.

Reports have crude by rail transport up 1700% over the last five years and accidents at a near-tenfold rise since 2008. With oil production currently at all time highs many fear that the number of accidents will increase and add to recent incidents:

In 2015, the NTSB outlined its findings from their study of recent train derailment accidents and concluded that the current fleet of DOT-111 tank cars rupture too quickly and result in spillage and ignition. The agency also found that performance of the industry’s enhanced CPC-1232 rail car is unsatisfactory. Based on their study, the NTSB gave the following recommendations that would require:

  1. All new and existing tank cars used to transport all Class 3 flammable liquids be equipped with thermal protection systems that meet or exceed the thermal performance standards
  2. All new and existing tank cars used to transport all Class 3 flammable liquids be equipped with appropriately sized pressure relief devices that allow the release of pressure under fire conditions and that minimizes the likelihood of energetic thermal ruptures
  3. An aggressive, intermediate progress milestone schedule, such as a 20 percent yearly completion metric over a 5-year implementation period, for the replacement or retrofitting of legacy DOT-111 and CPC-1232 tank cars to appropriate tank car performance standards
  4. Establishment of a publicly available reporting mechanism that reports at least annually

North Dakota Officials Optimistic

Optimism was the order of the day at the Williston Basin Petroleum Conference and Expo held Wednesday in Bismark.

Related: Bakken Production Down 4.6% Over 2014

The downturn caused by depressed oil prices has had a huge effect on North Dakota. But despite rig counts in the twenties and crude prices still fluctuating, officials continue to believe that good things are ahead for the region. Even though the state has seen a revenue shortfall, Governor Jack Dalrymple says the state's economy remains strong thanks to the work and investment of the energy industry. 

“From our perspective, we think that this industry in North Dakota is as solid as solid can be,” Governor Dalrymple said. “We couldn’t be more optimistic of what is ahead of us (...) and we see recovery on the horizon.”

Many believe that North Dakota's oil and gas activity will begin recovering when oil hits $60 a barrel. This price-point is looking more and more conceivable since prices have been flirting with $50 for the last few weeks. 

State Mineral Resources Director Lynn Helms likened North Dakota's oil future to a stock car race that has just begun, saying, "We're on lap 100 of a 500-lap race."

Bakken Rig Count at 25

Abraxas Buys Bakken Acreage

Bakken Rigs

The Bakken-Three Forks rig count fell this week with 25 rigs running across our coverage area by midday Friday.

A total of 414 oil and gas rigs were running across the United States this week, down five from last week. 86 were targeting natural gas (one less than the previous week) and 328 were targeting oil in the U.S. (four less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.)25 of the rigs active in the U.S. were running in North Dakota.

Bakken Oil & Gas Rigs

Bakken oil rigs fell to 25 this week with Bloomberg reporting WTI oil prices dipping to $44.62 on Friday afternoon. WTI-Brent also decreased this week to $45.32.  The Bakken has zero natural active gas rig in the area this week with futures trading to $2.10/mmbtu by midday.

McKenzie County continues to lead development with 12 rigs running this week, far outpacing other counties. View the full list below under the Bakken Drilling by County section.

Activity continues to be dominated by horizontal drilling:

  • 25 rigs are drilling horizontal wells
  • 0 rigs are drilling directional wells
  • 0 rigs are drilling vertical wells

Bakken Drilling by County

What is the Rig Count?

The Bakken Shale Rig Count is an index of the total number of oil & gas drilling rigs running across Montana and North Dakota. The rigs referred to in this article are for ALL drilling reported by Baker Hughes and not solely wells targeting the Bakken formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count.

Read more at bakerhughes.com