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Bakken Oil Production Soars After Long Decline

Bakken Oil Field

North Dakota just released their production numbers for the Bakken as well as for all North Dakota.

(Click to enlarge)

The numbers are shocking. The Bakken is up 70,798 bpd to 991,722 bpd and all North Dakota was up 71,447 bpd to 1,043,207 bpd. The EIA’s drilling productivity report really missed the ball on this one.

(Click to enlarge)

Bakken bpd per well was up 6 to 91 while North Dakota bpd per well was up 5 to 79.

From the Director’s Cut

Oil Production

September 29,152,805 barrels = 971,760 barrels/day

October 32,339,403 barrels = 1,043,207 barrels/day

(preliminary)(all-time high was Dec 2014 at 1,227,483 barrels/day

Gas Production

September 48,356,772 MCF = 1,611,892 MCF/day

October 53,180,102 MCF = 1,715,487 MCF/day (preliminary)( NEW all-time high )

Producing Wells

September 13,378

October 13,457 (preliminary)(NEW all-time high)

Permitting

September 63 drilling and 1 seismic

October 82 drilling and 1 seismic

November 76 drilling and 2 seismic (all time high was 370 in 10/2012)

ND Sweet Crude Price

September $32.98/barrel

October $39.31/barrel

November $34.58/barrel

Today $40.50/barrel (all-time high was $136.29 7/3/2008)

Rig Count

September 34

October 33

November 37

Today’s rig count is 40 (all-time high was 218 on 5/29/2012)

Comments: (Bold mine)

The drilling rig count decreased one from September to October, then increased three from October to November, and is currently up three from November to today. Operators are shifting from running the minimum number of rigs to incremental increases throughout 2017, as long as oil prices remain between $50/barrel and $60/barrel WTI.

Related: Why It Makes Economic Sense For The Saudis To Cut

The number of well completions dropped sharply from 73(final) in September to 45(preliminary) in October. Oil price weakness that is the primary reason for the slowdown is anticipated to last into the second quarter of 2017.

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

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

Estimated wells waiting on completion2 is 860, down one from the end of September to the end of October. Estimated inactive well count3 is 1,503, down nine from the end of September to the end of October.

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% and for shallow well rigs (7,000 feet or less) 1520%.

Okay, in September well completions were 73 and production fell by over 10,000 bpd. In October well completions fell by almost 40% to 45 while production increased by over 70,000 bpd. Would someone please explain how this is possible?

The following data from the EIA’s Drilling Productivity Report which came out Monday. The actual data is through September while their projections are through January 2017.

(Click to enlarge)

The EIA believes Total US Shale production will level out at about 4.54 million bpd in January. That will be down just over 900,000 bpd from its peak of 5.46 million bpd in March 2015.

(Click to enlarge)

Related: OPEC Jump Starts Oil Bull Market

As you can see they missed the Bakken October production by a country mile.

The EIA counts the Bakken as all North Dakota plus the Bakken area of Montana. Though all North Dakota production is not all Bakken, it is all within the Bakken area. That is, conventional wells within the Bakken area is counted as Bakken production even though North Dakota separates the two.

(Click to enlarge)

The big shale loser is Eagle Ford. The EIA says they will drop below one million bpd in January to about 980 thousand bpd. That, if correct, will put them down over 724 thousand bpd since the March 2014 peak.

(Click to enlarge)

But the Permian saves the day as far as shale is concerned. The EIA has the Permian increasing by over 37 thousand barrels per day in January and up almost a quarter of a million barrels per day since total shale peaked in March 2015. Of course the EIA is counting all production within the Permian areas, conventional as well as shale production.

Bruno Verwimp just posted me the following two graphs. As you can see his latest data point, October, still falls on his predicted decline curve

(Click to enlarge)

(Click to enlarge)

By Ron Patterson

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