Monday, June 17, 2013

Future Bakken Output and the Average Well Profile

In my June 14 post I discussed future decreases in average well productivity based on a single average well profile to create scenarios which would match the range of technically recoverable resources (TRR) in a recent USGS estimate for the Bakken/ Three Forks.

A recent discussion at the June 15, 2013 Drumbeat at the Oil Drum was very interesting with Rune Likvern providing  great insight (as usual) into recent data on Bakken output in North Dakota.

Mr Likvern believes that we may be seeing a decrease in average well productivity because a simulation with wells added at a rate of 125 well per month from Jan 2013 to April 2013 is showing greater output than recent data with 70 fewer wells added (500 for simulation vs 570 actual).  A decrease in average well productivity is one possible explanation.  An alternative possibility is that the average well profile may be different from the average well profile that Mr. Likvern has chosen.

I have created various well profiles in an attempt to match James Mason's work, Rune Likvern's work, the NDIC typical well, and the actual production data from the NDIC.  I have recently created some newer well profiles by using a minimization of the sum of the squared residuals between the model and data over the period from Jan 2010 to April 2013.  When no constraints are put on the minimization we get qi=11070, b=0.41, and d=0.078 (I call this model 7).

Friday, June 14, 2013

Future Bakken Crude Oil Output, Oil Price, USGS Estimates, and Decreases in Well Productivity

Summary Chart ND Bakken/Three Forks Scenarios

There is quite a bit of optimism in the US about potential future crude oil output.  Due to the media reports that the US will become self sufficient in oil output, many Americans believe that oil prices are likely to decline in the future due to the abundance of oil resources.  This view may be too optimistic.

The enthusiasm is based on the success in the North Dakota portion of the Bakken/Three Forks play since 2008. The high oil prices over most of the period from 2008 to 2012 has made the high cost oil from North Dakota profitable. Bakken/Three Forks output in North Dakota has expanded from 43 kb/d in Mar 2008 to 719 kb/d in Mar 2013, a 16 fold increase over 5 years. The media believes these increases will continue, but the rate of increase is slowing considerably.

As a cautionary tale, consider Bakken/ Three Forks crude output in Montana (at link click on formation code in left most drop down box and type "bak" in search box, most output is from the Elm Coulee fields (all charts can be clicked to enlarge):