Bakken's lifespan is growing
Author - Renée Jean
The Bakken’s lifespan is increasing thanks to technology, based on a two-year analysis of well production trends conducted by North Dakota Pipeline Authority Justin Kringstad.
The play now has between 18 and 40 years of additional drilling inventory at the $60 price point, which is commonly used by production companies in planning capital expenditures. At an $80 price point, the drilling inventory expands to between 20 and 50 years, assuming a rate of 1,100 new wells each year.
That’s just for drilling inventory. When you include the production lifespan, that adds another 30 to 40 years of life to the play.
That points to tremendous longevity in the Bakken for primary production, as well as later tertiary production strategies down the road.
Kringstad looked at 2020 production rates versus 2022 production rates to develop the analysis, which is something he told the Williston Herald he has been doing every two years.
“It’s having that mindset that this is not a static place,” Kringstad said. “It’s continuing to evolve. What we thought we knew five years ago is much different from what we know today. What we’re going to know five years from now will likely look much different than what you and I are talking about today. So it’s that continual growth mindset, and helping folks to understand the way that these plays continue to evolve and get developed and how things are continuing to change.”
Kringstad’s work echoes earlier work by mineral tracker Joel Brown’s presentation at the Williston Basin Petroleum Conference last year, showing that the Bakken’s core is expanding.
Brown looked at estimated ultimate recoveries for Bakken wells. Wells drilled in 2013 averaged EUR of around 240,000 barrels of oil. That had been the average for the 10 years prior, too.
But, in 2020, average EURs for Bakken wells took a giant leap. The new average is more like 580,000 barrels. That’s brought break-evens down from what used to be a $70 or so average to more like $37 a barrel, Brown said at the time.
Some analysts have portrayed that as shrinking into the core, but Brown and Kringstad’s data show otherwise.
Kringstad’s data, in particular, shows the land area considered Tier 2 and 3 shrinking while the land area considered Tier 1 is growing from 2020 to 2022.
Technological advances and better well completion know-how is driving the trend, Kringstad said, and is something that continues today. Producers are finding ways to wring more and more tight oil from shale rock formations in the Bakken and beyond.
“There’s a whole host of things that the frack crews and those planning those jobs will do, much of it’s kept proprietary,” Kringstad said.
On top of that, producers are now also drilling longer laterals, which is making better well economics, although Kringstad said it doesn’t appear to be what’s driving better production, based on his analysis of production stats on a per acre basis.
Getting that story out to the investment community is another matter, however, and a topic of timely discussion at the recent North Dakota Industrial Commission.
“How do we get this information to Wall Street and to the investment firms, so that they recognize the expansion of the core?” Gov. Doug Burgum asked.
Kringstad said he will be including the information in a number of investor presentations coming up with various midstream companies, and that he expects the data will get included in slide decks used by various oil and gas companies as they seek Wall Street capital.
North Dakota Department of Mineral Resources Director Lynn Helms, meanwhile, pointed out that private investment companies have already returned to pre pandemic levels in the Bakken, while publicly traded companies, which have new ESG goals to meet, have not.
Burgum said that trend means it’s very important that the state ensure it is not underinvesting in technologies that can decarbonize all of the state’s energy sources in its all-of-the-above energy strategy.
“We definitely have to keep the CCUS train moving on the Project Tundra and others that you guys have been investing in here now over a decade,” Burgum said. “Because nobody else is. I mean ESG has been effective in killing R & D in that industry.”
Those ESG goals are already changing production curves in the Bakken in ways that could potentially confuse investors, Kringstad told commissioners. To curtail flaring, companies are voluntarily dampening early production, to ensure all the gas is captured.
On the surface, that makes the first year curve look much less attractive than what the Bakken type curves used to show. That is more than made up for in the second year, however, as those wells aren’t declining as rapidly as they used to.
“This really does affect the perception of the Bakken,” Helms added. “These loads used to come in at 1,800, 2,000 barrels a day and decline maybe 20 percent. They now come in at six to 800 barrels a day and decline maybe 20 percent. So that second year is much, much stronger than it ever used to be.”
By month 10, production catches up to and is better than previous type curves, Kringstad said.
“I think that we’ll actually see it continue to exceed in total cumulative barrels as we get more data and history,” he added.
Kringstad’s projections show slight, 2 percent production growth in 2022, exiting the year at around 1.2 million barrels per day. Kringstad said he expects to see much stronger growth hit in 2023.
“All the major producers on the publicly traded side have put out guidances for 2022,” Kringstad said. “It ranges anywhere from completely flat to Continental in North Dakota has the most aggressive growth strategy. They are the outlier in one direction, and then you’ve got a lot of others that are in the low single digits.”