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Why Permian Prices Will Keep Breaking Records

Why Permian Prices Will Keep Breaking Records

Activity in the Permian is…

North Dakota Sees Small Production Decline


North Dakota data from the NDIC is out. Bakken/ Three Forks data shown in chart above (NDIC Data) with a Red Queen Model (based on Rune Likvern’s original work) using data gathered from the NDIC by Enno Peters to develop well profiles.

The model uses an estimate of the well profiles based on the NDIC well data. For Feb 2016 ND Bakken/Three Forks output fell by 3 kb/d to 1064 kb/d, Lynn Helms estimates that 63 wells were completed in February. North Dakota output fell 4 kb/d to 1118 kb/d.

Clearly the model has been underestimating output since Sept 2016, and I do not have a good explanation, it may be due to variation in the monthly well profiles.

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If we assume 63 wells per month are completed each month from March 2016 through Jan 2017 we get the following scenario, output is 840 kb/d in Jan 2017, or 160 kb/d less than the model output in Jan 2016 (1000 kb/d).

A few excerpts from the Director’s cut:

Oil Production
January 34,796,333 barrels = 1,122,462 barrels/day
February 32,431,669 barrels = 1,118,333 barrels/day (preliminary)(all-time high was Dec 2014 at 1,227,483 barrels/day)
1,064,108 barrels per day or 95 percent from Bakken and Three Forks
54,225 barrels per day or 5 percent from legacy conventional pools

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Producing Wells
January 13,141
February 13,012 (preliminary)(all-time high was Oct 2015 13,190)
10,898 wells or 84 percent are now unconventional Bakken – Three forks wells
2,114 wells or 16 percent produce from legacy conventional pools

January 78 drilling and 0 seismic
February 70 drilling and 1 seismic
March 56 drilling and 4 seismic (all time high was 370 in 10/2012)

ND Sweet Crude Price
January $21.13/barrel
February $18.07/barrel
March $26.62/barrel
Today $31.25/barrel (all-time high was $136.29 7/3/2008)

Rig Count
January 52
February 40
March 32

Today’s rig count is 29 (lowest since October 2005 when it was 29)(all-time high was 218 on 5/29/2012)

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The drilling rig count fell by 12 from January to February, 8 from February to March, and 3 more from March to today. Operators are committed to running the minimum number of rigs while oil prices remain at current low levels. The number of well completions fell from 71(final) in January to 63(preliminary) in February. Oil price weakness is the primary reason for the slow-down and is now anticipated to last into at least the third quarter of this year and perhaps into the second quarter of 2017. There was 1 significant precipitation event, 6 days with wind speeds in excess of 35 mph (too high for completion work), and 0 days with temperatures below -10F.

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

The estimated number of wells waiting on completion services is 907, down 38 from the end of January.

The estimated inactive well count is 1,439.

By Dennis Coyne via Peakoilbarrel.com

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