Conoco's Bakken Production Up 19% - Q2 2014

Conoco Phillips Bakken Acreage Map

Liquids production volumes from Conoco Phillips' (COP) Lower 48 assets increased by 22% year-over-year thanks largely to the Eagle Ford and the Bakken, company officials reported in their second quarter 2014 report at the end of July.

COP production grew by 38% year-over-year to 208,000 boe/d in the Eagle Ford Shale and Bakken Shale plays combined. That's ~39% of the company's total production for its Lower 48 asset portfolio. In the Bakken alone, production grew 19% quarter-on-quarter from 43,000 boe/d to 51,000 boe/d. However, company officials expect for the rate of growth to slow in both plays in the second half of the year due to multi-pad drilling effects and weather-related issues in the fourth quarter.

Read more: Conoco Phillips' Bakken Ford Production Up 80% in Q4 2013 to 43,000 boe/d

“Conoco’s EVP, Exploration and Production Matt Fox, said, “we expect to have multi pad drilling effects and are anticipating winter weather impacts in the fourth quarter. So the rate of growth will slow in the second half of the year. The net effect of this is we are still on track to achieve our 2014 volume targets for both the Eagle Ford and Bakken but we do expect rates to flatten in third and fourth quarters and then begin to ramp up as we head in to 2015.”

COP company officials say previously announced spacing pilot tests are being implemented in the Bakken, and more opportunities are being identified to tighten up well spacing.

Read more at conocophillips.com

North Dakota Hits Record Oil & Gas Production - June 2014

Bakken Oil Well

The State of North Dakota hit nearly 1.1-million b/d oil in June 2014, setting a new record, according to the Department of Mineral Resources' (DMR) August Director's Cut. During the same month, North Dakota also had record monthly gas production (1,253,154 mcf/d), and the highest recorded number of producing wells (11,079).

In April, North Dakota crossed the milestone 1-million b/d oil mark. The Bakken region, which includes portions of western Montana, exceeded the 1-million b/d mark at end of last year according to the Energy Information Administration (EIA). It is the fourth region, along with the Gulf of Mexico, Eagle Ford, and Permian basins, producing more than 1 million b/d in the nation.

Read more: North Dakota Hits the 1-Million b/d Mark

About 28% of gas produced in May and June was flared, despite the completion of Hess' Tioga Gas Plant expansion in May 2014. DMR officials noted the plant has been operating below full capacity due to the delayed expansion of gas gathering from South of Lake Sakakawea.

The expansion project, which is part of a $1.5 billion investment Hess has made in the area for infrastructure improvements, began processing about 120-million standard cubic feet of gas per day (mmscf/d) in May, according to Hess. The company expects the plant will process at least 250 mmscf/d with the potential to increase beyond 300 mmscf/d.

Read more: Hess Production to Soar in Bakken by the End of 2014

Highlights from August 2014 Director’s Cut

• May Oil – 1,040,469 b/d
• June Oil – 1,092,617 b/d
• May Gas – 1,192,860 mcf/d
• June Gas – 1,253,154 mcf/d
• May Producing Wells – 10,902
• June Producing Wells – 11,079
• 28% of produced gas in May and June flared

Read more at dmr.nd.gov

NDIC Considers Bakken Crude Treatment

Bakken Oilfield StorageTanks

The North Dakota Industrial Commission (NDIC) plans to hold a public hearing in the next few weeks to determine ways to reduce the volatility of Bakken crude before it is stored or transported.

The Wall Street Journal (WSJ) reported North Dakota officials are considering requiring oil & gas companies to treat Bakken crude before it is loaded onto trains. Stabilization, which is common in similar shale plays like the Ealge Ford Shale, is also being discussed among officials.

While some industry players argue Bakken crude shouldn't be subject to stabilization, a process by which the vapor pressure of crude oil is lowered, making it less volatile, they may not have a choice in the matter. According to the WSJ, the federal government has been weighing the idea of making stabilization a requirement.

Differing Opinions on Bakken Crude Volatility

In support of the argument for Bakken crude testing and possibly stabilization, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released a report in July of this year saying crude oil from the Bakken region in North Dakota tends to be more volatile and flammable than other crude oils. During the same month, the Department of Transportation (DOT) also proposed phasing out older DOT-111 tank cars for the shipment of packing group I flammable liquids within two years.

Read more: DOT Seeks New Rail Car Design and Bakken Crude Testing

By contrast, in May of this year, The American Fuel & Petrochemical Manufacturers (AFPM), an industry trade association, released findings from a study that examined the characteristics of Bakken crude oil. In their report, the AFPM claims Bakken crude is within the safety standards for current rail car designs (DOT 111 tank cars), and is comparable to other light crudes.

Read more: AFPM Study Finds Bakken Crude Meets Current Safety Standards for Rail Car Design

Read more at wsj.com

Continental Resources Bakken Production Up 11% in Q2 2014

Continental 2014 Production

Continental's Bakken production totaled 108,573 boe/d (North Dakota: 94,702 boe/d, Montana: 13,871 boe/d) in the second quarter of 2014. That's an increase of 11% quarter-on-quarter and 23% year-over-year.

During the quarter, the company completed 224 gross (93 net) wells in the Bakken, and finished the reporting period with an inventory of approximately 84 gross operated (66 net) Bakken wells drilled, but not completed. The second quarter drilling inventory numbers are down from 100 gross operated wells drilled, but not completed at the end of the first quarter of 2014.  Continental expects to complete approximately 870 gross (287 net) wells in the Bakken in full-year 2014, including both operated and non-operated wells.

Read more: Continental's Proved Reserves in Bakken Valued at $14.5 Billion - 2013

Continental Bakken New Completion Techniques Employed

The company continues to modify completion techniques. During the quarter, Continental conducted three slick water completions in an unspecified geological area of the play, which company officials say resulted in an average early cumulative production increase of 35% higher than the production trend for the company's 603,000 BOE estimated ultimate recovery (EUR) model for North Dakota. Additionally, in the same geological area, early production was also stronger for three wells completed with increased proppant volumes, which averaged between 200,000 to 300,000 pounds of proppant per stage.

“COO Rick Bott, said, “we’re pleased with several of the new completion methods we are testing and early results show significant improvements in well performance. We are studying the broader implications of applying enhanced completions across the play.”

Continental Bakken Well Tests Update

In 2013, Continental began testing different areas across the Bakken field to determine the optimum well density and pattern for maximizing recovery and returns.  So far, the company has initiated seven density pilot projects, all designed to include the Middle Bakken ("MB") and Three Forks One, Two and Three across the company's approximately 1.2 million net acres of leasehold.

Three of these projects are testing 1,320-foot inter-well spacing and four are testing 660-foot inter-well spacing. Four of the projects have already been completed. Company officials indicate positive results from the first completed 660-foot inter-well spacing test:

• Wahpeton (660 ft test); Initial Production (IP) rate for 12 wells in unit - 1,015 boe/d; IP rate for three MB wells in unit only - 1,730 boe/d

Three more projects testing the 660-foot inter-well spacing are in various stages of drilling or completion. The new wells are expected to be completed in the second half of 2014.

Read more at contres.com

Bakken Shale Rig Count Increases by Five to 189

Magnum Hunter Resources Bakken Acreage Map

The Bakken-Three Forks rig count increased by five to 189 rigs running across our coverage area by the end of last week. The NDIC notes 193 rigs are active in North Dakota, but around 23 of those are in the process of moving in and rigging up.

In recent Bakken news, Magnum Hunter announced last week that the company will sell its Divide County, North Dakota operated/non-operated properties and reallocate resources to core operations in the Appalachian Basin. Baytex Energy, Continental Resources, or Samson Resources are all likely buyers for the acreage.

Read more: Magnum Hunter Decides to Exit North Dakota Bakken

The U.S. rig count increased by 19 to 1,908 rigs running by the end of last week. A total of 316 rigs were targeting natural gas (three more than the previous week) and 1,588 were targeting oil in the U.S. (15 more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 191 rigs are running in the Williston Basin across MT, ND, and SD. 182 are in ND alone.

Not all rigs counted in our census are drilling for the Bakken, but it's close. The NDIC estimates 95% or more of activity in this region targets the Bakken and Three Forks formations.

Note: The NDIC reports 193 rigs are active in North Dakota. That is two more than Baker Hughes reports in the Bakken area, and 11 more than the company reports in North Dakota. The difference is likely accounted for in the number of rigs actually working, rigs that might not be serviced by Baker Hughes AND rigs in areas outside of the Bakken fairway. On any given week, a certain number of rigs are in route to the next well location or idle waiting to drill the next well. The NDIC notes that around 23 rigs are in the process of moving in and rigging up.

Bakken Oil & Gas Rigs

The number of oil rigs increased by five to 189 rigs running by the end of the week . WTI oil prices stayed relatively flat from the previous week, trading at $97.57/bbl on Friday afternoon. Williston Basin Sweet crude traded at $84.19/bbl on Aug. 7th. The WTI-Brent stayed flat, settling at ~$7 by the end of last week.

The natural gas rig count in the region held flat at zero. Natural gas futures (Henry Hub) were trading at $3.97/mmbtu by the end of last week. A little more than 10% of the production stream from the Bakken and Three Forks is attributable to natural gas and roughly half of that is NGLs.

McKenzie County continues to lead development with 65 rigs running. Dunn, Mountrail, and Williams counties are the only other counties with more than 20 rigs running each. View the full list below under the Bakken Drilling by County section.

Activity is dominated by horizontal drilling:

• 174 rigs are drilling horizontal wells
• 14 rigs are drilling directional wells
• 1 rig is drilling a vertical well

Bakken Oil & Gas News

• Bakken Major Contributor to EOG's Production Growth in Q2
• Magnum Hunter Decides to Exit North Dakota Bakken

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Bakken Drilling by County

What is the Rig Count?

The Bakken Shale Rig Count is an index of the total number of oil & gas drilling rigs running across Montana and North Dakota. The rigs referred to in this article are for ALL drilling reported by Baker Hughes and not solely wells targeting the Bakken formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count.