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November 16, 2009

North Dakota Oil Production Projected to be 350,000 Barrels of Oil Per Day in 2010

Forbes reports that North Dakota's oil production is expected to approach 350,000 barrels next year, an increase of more than 50 percent, because of a major pipeline expansion and the anticipated startup of a shipping terminal near Stanley (SXE) that will be able to haul 60,000 barrels a day by rail to refineries near Cushing, Okla.

The latest statistics for North Dakota oil production are for Sept, 2009. They report 238,003 barrels of oil per day. Production has been increasing by 5,000 to 10,000 barrels of oil per day each month. If this trend is continuing then November, 2009 production would be 248,000-258,000 barrels of oil per day and would be in the range of 255,000-265,000 barrels of oil per day at the end of 2009.

Bakken oil production (Sask, ND, Montana) would be in the 500,000 barrel of oil per day range in 2011-2012 and onwards.

The 500,000 bpd is over 3 times what was coming from the Bakken two years ago and double the estimate of whether Bakken could move the needle for US production.

465,000 bpd from Montana and ND would be 14 million barrels of oil per month.

US production of oil is 162 million barrels per month.

So over 8% of US oil production.

The oil production technology for the Bakken is still improving and they are talking about possibly getting to 30% of the oil in place. 400 billion barrels of oil in place. That would be 120 billion barrels. So the 6-8 billion barrels of reserves talk is a snapshot.

167 billion barrels of oil in-place in the North Dakota portion of the Bakken and not including Three Forks Sanish oil.

It also combines with Gulf of Mexico oil for the USA.

Eventually offshore drilling in California would be allowed (if oil problems became more serious) and currently off limits Alaska oil.

Saskatchewan is producing 65,000 barrels of oil per day from its part of the Bakken

Analysts have calculated that Bakken plays will break even with oil at about $30 (U.S.) a barrel. That calculation is part of the reason why valuations in the area have been high. Crescent Point, for example, paid $142,643 (Canadian) per producing barrel of oil equivalent for TriAxon – double the average for Canadian energy transactions this year.

Saskatchwan oil companies have yet to find a way to wring more than about 20 per cent of the oil from the ground. New techniques are promising – underground water injections, for example, could boost recovery rates to over 30 per cent – but the Saskatchewan plays retain technological risk. Crescent Point, for example, has told investors it has the potential to more than double its reserves – and risk that new ground won't be as productive.




North Dakota's current production now exceeds 238,000 barrels a day, which ranks the state behind only Texas, Alaska and California. The state's output supplies about 2 percent of the nation's domestic crude oil output.

If oil prices stay above $60 a barrel and contemplated oil transportation projects become reality, the state could be producing 400,000 barrels of oil daily within five years, said Lynn Helms, director of the state Department of Mineral Resources.


Canadian Business reports: Billionaire oilman Harold Hamm believes North Dakota's oil reserves are double the federal government's estimates.

He said the U.S. Geological Survey's estimate of 4.2 billion barrels of oil in the Bakken shale formation could be "100 percent off."

Hamm is the chairman and chief executive officer of Continental Resources Inc., an independent oil and gas company based in Enid, Okla. His company was one of the first to tap the Bakken formation in North Dakota's oil patch 20 years ago.

The Bakken formation encompasses some 25,000 square miles in North Dakota, Montana, Saskatchewan and Manitoba. About two-thirds of the acreage is in western North Dakota.

Hamm also said he believes domestic reserves are growing, and not just in North Dakota.



More expansion being planned by the pipeline companies Enbridge Inc. ( ENB ) and Kinder Morgan Energy Partners (EPL ) LP would allow another boost that could put the state's daily production at 400,000 barrels, Helms said.


Recovery Rate and Well Differences Between Saskatchewan and North Dakota Bakken

From Bakken Discussion Group

A typical Bakken section is generally recognized by third party reserve evaluators as containing approximately 4.0 mmbbls of original- oil-in-place with proved plus probable reserve recovery estimated at 12.5%. PetroBakken's internal assessments, based on ongoing strong production performance combined with increased well density and frac intensity is ultimately expected to increase reserve recovery to up to 22.5%. PetroBakken will control 440 net sections of land, with an estimated ultimate recovery factor of 22.5%, the potential recoverable resource could approach 400 mmbbls.


Recovery rate estimates in North Dakota have been about 1-2%.

The increased recovery rate seems to be based upon "using multi-leg horizontal drilling technology that reduces inter-well distance between horizontal legs from 400 metres to 200 metres". Currently in North Dakota the smallest horizontal drilling unit is 640 acres. If the ND oil companies downsize to the point where there is a horizontal leg every 200 meters, then that would result in something
like 7 wells per 640 acres. Reducing interwell distance could allow recovery rates of 22.5% vs the something like 10% currently being advertised. The economics of one well that costs $5 million and recovers 10% is a lot different than the economics of 7 wells costing $35 million and recovering 22.5%.

The bakken is much closer to the surface in canada such that it is cheaper to drill each one of those wells.

The canadian bakken is a different animal, with decent intergranular porosity and permeability, more like a conventional reservoir and much shallower.


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