oil & gas activity update€¦ · 23/9/2013 · western north dakota water • 1,100 to 2,700...
TRANSCRIPT
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Federation of Tax Administrators
Annual Motor Fuel Conference
Fargo, ND– September 24, 2013
ANNUAL
MEETING
Oil & Gas Activity UPDATE
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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
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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
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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
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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’
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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
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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
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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
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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
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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
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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.
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Stage Fracturing
• up to 40 stages
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Purposes of frac fluid
• crack the reservoir
• gel strength to carry sand
Frac fluid is produced back as
flowback
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Sea Level
Oil & Gas Bakken/Three Forks
Precambrian
Basement
Base of fresh water
9000’
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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
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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
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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
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THREE FORKS
BAKKEN
Bakken Producer
15,000 sq mi
8000 wells
1H/1280
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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.
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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
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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
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NORTH DAKOTA – 171 DRILLING RIGS – June 2011
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Six Wells on a Single Pad
Vern Whitten Photography
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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
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Small Footprint
• Developed 13,000 acres
• 14 wells
• rough topography
• LMR Confluence
Vern Whitten Photography
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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
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Thirsty Horizontal Wells
• 2,000 wells / year
• 15-25 years duration
• 20 million gallons water / day
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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
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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
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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
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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
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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
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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
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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
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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%)
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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
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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
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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
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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
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File No. 15092
Armstrong #1-5 Hanson
Sec 5-T155N-R102W
Williams County, ND
Reclaimed Location