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Bakken Oil Production Continues To Slide

Bakken

Bakken oil production was down 10,119 barrels per day in September and all North Dakota production was down 10,353 bpd in September.

Bakken production continues to decline, though I expect it to level off soon.

Barrels per day per well continue a steady decline. Bakken bpd per well fell 2 to 85 while all North Dakota bpd per well fell 2 to 74.

From the Director’s Cut

Oil Production

August: 30,442,347 barrels = 982,011 barrels/day

September: 29,149,737 barrels = 971,658 barrels/day (preliminary) (all-time high was Dec 2014 at 1,227,483 barrels/day)

920,899 barrels per day or 95 percent from Bakken and Three Forks

50,759 barrels per day or 5 percent from legacy conventional pools

Producing Wells

August: 13,295

September: 13,367 (preliminary)(NEW all-time high)

Permitting

August: 99 drilling and 1 seismic

September: 63 drilling and 1 seismic

October: 82 drilling and 1 seismic (all time high was 370 in 10/2012)

ND Sweet Crude Price

August: $33.73/barrel

September: $32.98/barrel

October: $39.31/barrel

Today $34.75/barrel (all-time high was $136.29 7/3/2008)

Rig Count

August: 32

September: 34

October: 33

Today’s rig count is 38 (all-time high was 218 on 5/29/2012)

Comments:

The drilling rig count increased two from August to September, then decreased one from September to October, and is currently up five from October to today. Operators are shifting from running the minimum number of rigs to incremental increases throughout 2017 as long as oil prices remain below $60/barrel WTI.

The number of well completions rose from 63(final) in August to 71(preliminary) in September. Oil price weakness is the primary reason for the slow-down and is now anticipated to last into the second quarter of 2017.

Related: Does A Link Remain Between Inflation And Oil Prices?

There was one significant precipitation event, 10 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

Over 98 percent of drilling now targets the Bakken and Three Forks formations.

Estimated wells waiting on completion is 861, down 27 from the end of August to the end of September. Estimated inactive well count is 1,514, unchanged from the end of August to the end of September.

Crude oil take away capacity remains dependent on rail deliveries to coastal refineries to remain adequate.

Low oil price associated with lifting of sanctions on Iran, a weak economy in China, and the Brexit are expected to lead to continued low drilling rig count. Utilization rate for rigs capable of 20,000+ feet is 25-30 percent and for shallow well rigs (7,000 feet or less) 1520 percent.

Drilling permit activity dropped sharply from August to September then increased from September to October. Operators are maintaining a permit inventory that will accommodate a return to the drilling price point within the next 12 months.

The Shale Revolution changed everything about U.S. energy markets, and in the process made forecasting the production and pricing of crude oil, natural gas and NGLs a heck of a lot harder. But we all learn from experience…

Let’s begin, as we did in our 2013 blog series, with a look at crude oil production in the Bakken. When we look back to the mid-2011 forecast (by Bentek; left graph in Figure 1), crude output in western North Dakota and eastern Montana (green shaded area) had already risen sharply (to ~500 Mb/d in 2011 from ~200 Mb/d in 2007), and the forecast was that Bakken production would climb to ~900 Mb/d in 2016 (blue shaded area). By mid-2011, crude output already had exceeded the play’s pipeline takeaway capacity (black line), and planned pipeline capacity additions were not expected to relieve that constraint until early 2013. As a result, Bakken producers were already adding crude-by-rail (CBR) takeaway capacity (area between black and red lines; ~120 Mb/d as of 2011) as a solution to moving crude to market––and planning to add another 300 Mb/d of CBR capacity by 2013.

(Click to enlarge)

Go to the link to read the rest of this article. It is very interesting. As you can see they have the Bakken peaking in December 2014 with the yearly average peaking in 2015. Even their growth scenario levels out through 2018 and their contraction scenario projects a continued decline.

(Click to enlarge)

I did not save the link or date for this chart but I am pretty sure it dates from late 2013 or early 2014. They have the Bakken peaking at 2 million bpd in 2023. I inserted the lines to show their peak date and where we should be right now in 2016.. Predicting oil production is a fools game but I sometimes play the fool myself.

By Ron Patterson via Peakoilbarrel.com

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  • Guy minton on November 19 2016 said:
    Texas production for September out on the online research section of RRC. Huge drop.

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