oil & gas activity update€¦ · 23/9/2013 · western north dakota water • 1,100 to 2,700...
TRANSCRIPT
Federation of Tax Administrators
Annual Motor Fuel Conference
Fargo, ND– September 24, 2013
ANNUAL
MEETING
Oil & Gas Activity UPDATE
North Dakota Development
• Regulation
• Resource Play
• Uniform Spacing—orderly development
• Multi-well locations—small footprint
• Corridors—industry and residents
• Water Needs—surface waters
• Bakken Results Bruce E. Hicks
Assistant Director
NDIC-DMR-OGD
Bismarck, ND
600 East Boulevard Ave. - Dept 405
Bismarck, ND 58505-0840
(701) 328-8020 (701) 328-8000
North Dakota Department of Mineral Resources
https://www.dmr.nd.gov/ndgs/ https://www.dmr.nd.gov/oilgas/
NDGS
Research Arm
OGD
Regulatory
Arm
North Dakota Development
• Regulation
• Resource Play
• Uniform Spacing—orderly development
• Multi-well locations—small footprint
• Corridors—industry and residents
• Water Needs—surface waters
• Bakken Results
4 ½” Frac String
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
• Drill with fresh water
• Total depth below lowest potable water
• Run in hole with surface casing
• Cement casing back to surface of ground
• 1st layer of surface water protection
TYPICAL HORIZONTAL OIL WELL
9-5/8” @ 2500’
7” Casing
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
TYPICAL HORIZONTAL OIL WELL
9-5/8” @ 2500’
Cement
KOP @
10500’
• Drill vertically to kick-off point
• Run in hole with bent assembly
• Downhole mud motor
7” Casing
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
• Drill 8-3/4” hole to pay
• Run in hole with 7” casing
• Cement 7” casing
• 2nd layer of protection
TYPICAL HORIZONTAL OIL WELL
9-5/8” in 13.5” Hole
Cement
Kick-off
Point
Build
Section
7” Casing
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
• Drill lateral in pay
• Run in hole with 7” casing
• Cement 7” casing
• 2nd layer of protection
TYPICAL HORIZONTAL OIL WELL
9-5/8” in 13.5” Hole
Cement
Kick-off
Point
Horizontal lateral
Build
Section
4.5”
Frac
String
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
TYPICAL HORIZONTAL OIL WELL
Cement
Packer
Run in hole with:
• 4.5” liner
• 30-40 swell packers
• sliding sleeves / P&P
• 3rd layer of protection
4.5” liner
4.5”
Frac
String
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
TYPICAL HORIZONTAL OIL WELL
Cement
Packer
Run in hole with:
• 4.5” liner
• 30-40 swell packers
• sliding sleeves
4.5” liner
Thousands of fractures are created
• pumping water at 6,000-9,000 psi
• millions of pounds of sand and
ceramic beads are pumped with the
water to hold the fractures open.
Stage Fracturing
• up to 40 stages
Purposes of frac fluid
• crack the reservoir
• gel strength to carry sand
Frac fluid is produced back as
flowback
Sea Level
Oil & Gas Bakken/Three Forks
Precambrian
Basement
Base of fresh water
9000’
Performing hydraulic fracture stimulation south of Tioga
• all Bakken wells must be hydraulically fractured to produce
• > 2 million gallons of water
• > 3 million pounds of sand
• cost: $2-3 million
WHY FRAC THE ROCK?
• already developed easy oil
• oil flows easily without fracking
• Unconventional Reserves
• reservoirs are tight
• look at sample
• uneconomic to produce w/o fracing
• must create a path for oil to flow
North Dakota Development
• Regulation
• Resource Play
• Uniform Spacing—orderly development
• Multi-well locations—small footprint
• Corridors—industry and residents
• Water Needs—surface waters
• Bakken Results
THREE FORKS
BAKKEN
Bakken Producer
15,000 sq mi
8000 wells
1H/1280
NORTH DAKOTA – 190 DRILLING RIGS – Jan 2013
NORTH DAKOTA – 186 DRILLING RIGS – SEPTEMBER 2013
Current drilling activity is focused
in Mountrail, Dunn, McKenzie, and Williams Counties.
North Dakota Development
• Regulation
• Resource Play
• Uniform Spacing—orderly development
• Multi-well locations—small footprint
• Corridors—industry and residents
• Water Needs—surface waters
• Bakken Results
North Dakota Development
• Regulation
• Resource Play
• Uniform Spacing—orderly development
• Multi-well locations—small footprint
• Corridors—industry and residents
• Water Needs—surface waters
• Bakken Results
NORTH DAKOTA – 171 DRILLING RIGS – June 2011
Six Wells on a Single Pad
Vern Whitten Photography
North Dakota Development
• Regulation
• Resource Play
• Uniform Spacing—orderly development
• Multi-well locations—small footprint
• Corridors—industry and residents
• Water Needs—surface waters
• Bakken Results
Small Footprint
• Developed 13,000 acres
• 14 wells
• rough topography
• LMR Confluence
Vern Whitten Photography
North Dakota Development
• Regulation
• Resource Play
• Uniform Spacing—orderly development
• Multi-well locations—small footprint
• Corridors—industry and residents
• Water Needs—surface waters
• Bakken Results
Thirsty Horizontal Wells
• 2,000 wells / year
• 15-25 years duration
• 20 million gallons water / day
Commission supports surface water use
• Lake Sakakawea best water resource
• one inch contains 10 billion gal water
• 5000 wells @ 2mil gal wtr/well
• 2-year supply
North Dakota Development
• Regulation
• Resource Play
• Uniform Spacing—orderly development
• Multi-well locations—small footprint
• Corridors—industry and residents
• Water Needs—surface waters
• Bakken Results
North Dakota Well Depth and % Horizontal
0
4,000
8,000
12,000
16,000
20,000
1950 1960 1970 1980 1990 2000 2010 2020
Dep
th (
Feet)
0%
20%
40%
60%
80%
100%
Average Depth Per Well Percent Horizontal Wells
1987
RIGS
• 186 rigs currently
• 225 rigs - 2 years to secure leases
• 225 rigs – another 16 years f/5H/SU
• Declining rig count?
• walking rigs replace inefficiencies
• drilling more wells w/less rigs
WELLS
• 9,322 wells currently producing
• 5,897 Bakken
• 3,000 more to secure leases
• 40,000 additional development wells
• 225 rigs – another 16 years
• 100 rigs – another 30 years
• Bakken Pool – 4 targets
Typical 2012 Bakken well
• 45-year well life
• 615,000 barrels of oil
• $9 million to drill and complete
• $20 million net profit
• $4 million in taxes
• $7 million in royalties
• $2 million in wages
• $2 million in operating expenses
Production 874,460 bopd (appr 795,064 from Bakken—91%)
North Dakota Daily Oil Produced and Price
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
BO
PD
$0
$40
$80
$120
$160
$200
$240
$280
$320
$360
ND
Sw
eet
$/B
O
BOPD $/BO
North Dakota Wells Producing
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
5897
Bakken
9322 total wells – 5462 Bakken horizontal (63.3%)
Typical Bakken Well Production
0
200
400
600
800
1000
1200
0 5 10 15 20 25 30 35 40
Year
Ba
rre
ls o
f O
il p
er
Da
y
Steep declines
65%-1st yr
35%-2nd yr
15%-3rd yr
10% thereafter
North Dakota Oil Production
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,0001970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
Ba
rre
ls p
er
Da
y
History Bakken - Three Forks P10 Bakken - Three Forks P50 Bakken - Three Forks P90
Possible 225-250 rigs
Proven
875,000 BOPD 60 rigs
5,897 Bakken and Three Forks wells drilled and completed
35,000 - 40,000 more new wells possible in thermal mature area
Expected Case North Dakota Oil Industry Jobs
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Year
Jo
bs
Prod jobs Gathering jobs Fracing jobs Drilling jobs
Western North Dakota Water
• 1,100 to 2,700 wells/year = 2,000 expected
– 185 rigs will complete the first phase of drilling in 6-12 months
– 185 rigs will require about 20 years to complete phase 2 drilling
– 2,000 new wells per year requires 11-22 million gallons of frac water per day
– 40,000-45,000 new wells = 17-28 million gallons per day maintenance water
File No. 15092
Armstrong #1-5 Hanson
Sec 5-T155N-R102W
Williams County, ND
Reclaimed Location