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The Battle For Oil Market Share Heats Up Within OPEC

The Battle For Oil Market Share Heats Up Within OPEC

Middle Eastern producers have maintained…

Oil Markets Unfazed By Falling Imports From China

Oil Markets Unfazed By Falling Imports From China

Oil prices continued to climb…

Bakken Flat But EIA Predicts Decline

The North Dakota Industrial Commission has published the July production data for The Bakken and for all North Dakota.

(Click to enlarge)

Bakken production was down 5,430 barrels per day while all North Dakota was down 9,410 bpd.

(Click to enlarge)

Here is a more amplified view of what has happened during the last 12 months.

(Click to enlarge)

Bakken barrels per day per well has been falling faster than for all North Dakota. This is because a lot of very low producing conventional wells are being shut down.

Related: The Shale Delusion: Why The Party’s Over For U.S. Tight Oil

(Click to enlarge)

This is chart reflects the monthly change in North Dakota barrels per day of production. It is quite noisy but the 12 month trailing average reflects a steady decline since December of 2014.

From the Director’s Cut, bold mine.
June Sweet Crude Price1 = $47.73/barrel
July Sweet Crude Price = $39.41/barrel
Aug Sweet Crude Price = $29.52/barrel
Today’s Sweet Crude Price = $30.25/barrel
(low-point since Bakken play began was $22.00 in Dec 2008)
(all-time high was $136.29 7/3/2008)

Comments: The drilling rig count dropped 5 from June to July, increased 1 from July to August, and dropped 5 this month. Operators are now committed to running fewer rigs than their planned 2015 minimum as drill times and efficiencies continue to improve and oil prices continue to fall. This has resulted in a current active drilling rig count of 10 to 15 rigs below what operators indicated would be their 2015 average if oil price remained below $65/barrel.

The number of well completions fell from 149 (final) in June to 119 (preliminary) in July. Oil price weakness now anticipated to last well into next year is the main reason for the continued slow-down. There was one significant precipitation event in the Dickinson area, 12 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. At the end of July there were an estimated 914 wells waiting on completion services, 70 more than at the end of June.

Rig count in the Williston Basin had stabilized, but the drop in oil price associated with anticipation of lifting sanctions on Iran and a weaker economy in China is leading to further cuts. Utilization rate for rigs capable of 20,000+ feet is about 45% and for shallow well rigs (7,000 feet or less) about 25%.

Drilling permit activity increased from June to July but fell sharply from July to August as operators positioned themselves for low 2016 price scenarios. Operators already have a significant permit inventory should a return to the drilling price point occur in the next 12 months.

The number of wells producing in the Bakken in July was 10,038, an increase of 127. In all North Dakota the number of producing wells was 12,577, an increase of 107. That means at least 20 conventional wells were shut down. This begs the question of how Bakken wells could increase by 127 when wells completed were only 119 while at least 20 wells were shut down.

And this from the NDIC: County Break-Even Price

The EIA has released their Drilling Productivity Report came out Monday also. The chart below is their prediction of Bakken production through October

(Click to enlarge)

Below are their production predictions for the four major shale producing areas through October.

Related: EU’s Energy Market In For Some Drastic Changes

The Permian does not have nearly the decline rate as the rest of the shale patches because the Permian is about 50% conventional wells.

Related: Panasonic Now Gunning For Tesla’s Energy Storage Crown?

(Click to enlarge)

Here is the EIA’s Drilling Productivity Report projection for US total shale production through October.

By Ron Patterson

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