ND defies predictions with record oil production

ND resumes record monthly oil production, on pace for record year despite predicted slump

By James Macpherson, Associated Press Writer
On 6:54 pm EDT, Tuesday October 20, 2009

BISMARCK, N.D. (AP) -- North Dakota is again setting monthly oil production records and may be on pace to set a record for the year, state and industry officials said Tuesday.

It's a turnaround from just a few months ago, when slipping crude prices and a slumping U.S. economy led officials to believe last year's record production in the state's oil patch might never be surpassed.

Now officials are happily eating crow.

"It's been crazy," said Ron Ness, president of the North Dakota Petroleum Council, a Bismarck-based group that represents about 160 companies. "It's a good thing."

The state Industrial Commission reports that North Dakota oil wells pumped an average 226,940 barrels a day in July and 231,252 barrels daily in August, the latest figures available because oil production numbers typically lag at least two months. The previous high of 215,637 barrels a day was set in November 2008.

North Dakota produced a record 62.8 million barrels last year, up nearly 18 million barrels from 2007.

Ness and Lynn Helms, director of the state Department of Mineral Resources, had predicted that oil activity in 2009 would be at 2007 levels.

"There has been a very sharp rebound in oil prices and the rig count has recovered a great deal," Helms said Tuesday. North Dakota's harsh winter led to a drop in drilling activity during the first few months of this year, he said.

The state has been producing more than 7 million barrels per month since July, which puts it on par with Oklahoma in the top five oil-producing states, Ness said.

North Dakota sweet crude was fetching about $68 on Tuesday, more than double the price in December, a five-year low after a record $136.29 in July 2008.

Oil prices at $50 to $70 a barrel keep the investment climate strong in North Dakota, and keep wells working in the state's oil patch, industry officials say.

North Dakota has 4,541 active oil wells, Helms said. That's up from 4,025 at the same time last year, and 3,616 in 2007, records show.

The state had a record 98 rigs working last fall but the count dropped to about 30 early this year. Fifty-seven rigs were operating in North Dakota's oil patch this week.

Each active rig represents about 40 direct jobs and 80 indirect jobs in the state, Ness said.

The state reached its pipeline, rail and refining capacity of about 189,000 barrels daily in October 2008, Helms said. Prices for North Dakota crude generally lag about $10 behind other oil on the New York Mercantile Exchange because of the commodity's distance from the markets, he said.

Infrastructure improvements, including a new rail shipping station and a pipeline expansion project in northwestern North Dakota, will increase the state's shipping capacity by about 115,000 barrels daily, Helms said. The projects are expected to be finished early next year and should add about $5 per barrel to the price of North Dakota sweet crude, he said.

Ness said some companies are likely curbing some production to take advantage of the higher prices that could come with the bump in shipping volume.

At the same time, technology is improving throughout the Williston Basin to capture oil faster and more efficiently from the Bakken and Three Forks-Sanish formations in western North Dakota, Ness said.

"2010 is starting to look big," Ness said.

Did they give any hints about how they're doing it? Steam, CO2, whatever. If they're using new recovery techniques ahead of other domestic producers, is it reasonable to think that all domestic output might get a substantial boost?

got 2 things to say, one, EROI, two: "Oil prices at $50 to $70 a barrel keep the investment climate strong in North Dakota, and keep wells working in the state's oil patch, industry officials say."

here is your oil price floor. we hit peak in 2005 on conventional crude and prices below the 40-ish range shut in more production than demand drops, price will see-saw but oil has a production cost associated with it that prevents "just pump more" in all cases. all barrels are not equal. Ghawar barrels are probably 100:1 EROI, or were. tarsands barrels are 3:1 EROI. these ND bakken barrels are, given the cost figures, even lower. cost is another way of saying how much energy you need to put into the thing to get the barrel out. there is energy in each manufacturing, mining, pumping, chemical producing step, and these are translated into cost. whizbang value-add diamond drillbits obviously have a labor or technology value-add, but at a low level, cost is a fair presumptive approximation of EROI

it is not reasonable to assume that domestic production will get a boost; this is high-priced, low EROI oil. aka spend lots of NG to get oil

So this is 100% due to the vagaries of the market.

Bummer.

There was a line in there about "North Dakota sweet crude" so I thought that all of the wells might be producing the good stuff. But I guess even if that's true and your production costs aren't a lot lower than spot, it doesn't really matter.

Thank you.

yes, they are effectively spending $50-$70 to get an $80 barrel of oil out, maybe it's a little lower, but let's just say that avg they need $60 to have any profitability

production costs on the elephant subsurface fields like in KSA were in the range of $8/bbl. go to cos-trust.com and take a look at the financials; they tell you explicitly what the syncrude production costs are and this venture is the cadillac of Athabasca tarsands, literally the very cream of the lease crop, pure mine, conveyor, wash, refine; no in situ. full-year figures as of last Q were $38.xx/bbl

New North Dakota production comes from the Bakken shale formation and a very new formation the Three Forks shale formation.

Technology. The wells go down down 10,000 feet and then horizontal for up to 9,000 more feet (total of 4 miles; how many of you can run that far?)

The tight shale is fractured in up to 28 stages. A completed well is about $6.5 million. Horizontal drilling is a relatively new technology and multi-stage facturing is even newer.

These wells generate about a 100% ROR on drilling and completion costs. That's hot.

Drilling and fracing costs have fallen about 40% because NG drilling in the U.S. has fallen sharply. Drilling rigs are begging for work.

This same technology used in the new natural gas wells that have created the current over-supply of NG.

Major independent players are BEXP, CLR, and WLL. These are the only ones that I would seriously consider. If you are Canadian, they have some hot firms drilling on their side of the border.

I could care less about peak oil theories. If the stories about the Chinese economy and auto/truck sales in China are true, oil demand will be high.

this was an oil production thread, dumb@ss

the EROI on a Bakken well is not lower than a tar sands play. The oil averages 38-40 degrees api. the stuff flows without heat and comes out ready for a pipeline. The oil in the bakken formation is in a sandstone layer between two layers of shale, it is not a true shale oil play. the high costs are all in the drilling and fracing. once the well is in place the costs are quite low.

the numbers in ND are coming up with new wells being drilled and new frac technology being employed. There is a company on this side of the border who is now playing with 60 stage frac's. The frac's being done on some old wells has, in some cases, doubled their production. This goes for all the formations in the williston basin, not just the bakken.

Quote:

this was an oil production thread, dumb@ss

Wow, too bad the poster with the lame name isn't allowed to post on this subforum anymore.

Not. ;)

Report: ND is now 4th biggest oil-producing state
Energy Department says ND is now 4th biggest crude-producing state, surpassing Louisiana

By James Macpherson, Associated Press Writer
On 2:23 pm EDT, Wednesday October 28, 2009

BISMARCK, N.D. (AP) -- North Dakota has surpassed Louisiana as the fourth-largest oil-producing state in the nation, the U.S. Energy Department says.

The agency's Energy Information Administration said North Dakota produced 6.38 million barrels of crude in May, edging Louisiana, which had 6.34 million barrels for the month. Oklahoma was ranked fifth, at 5.7 million barrels for that month, according to the most recent figures. Oil production data typically lags at least two months.

Steven G. Grape, an Energy Department petroleum engineer, said Wednesday that North Dakota averaged 206,000 barrels daily in May, compared with 205,000 barrels for Louisiana.

North Dakota's oil production, pegged at 2.8 million barrels for May 2005, has risen sharply since then with improved horizontal drilling technology in the rich Bakken shale and Three Forks-Sanish formations in the western part of the state.

"In the Bakken and the Three Forks, they're having great success poking new holes," Grape said. "If you look at the increase, it doesn't look like it's letting up."

Energy Information Administration figures show Louisiana's oil production has slipped from 7.4 million barrels in May 2005. Grape said natural gas has overshadowed oil as a priority for drillers in Louisiana.

"They're looking at different targets onshore," Grape said.

North Dakota produced a record 62.8 million barrels of oil last year, up nearly 18 million barrels from 2007. State and industry officials expect another record this year, and perhaps in 2010 when a new rail shipping station and a pipeline expansion project come on line in northwestern North Dakota.

Ron Ness, president of the North Dakota Petroleum Council, said the state is actually producing more than 7 million barrels daily at present.

Texas, Alaska and California are currently the top oil-producing states. Texas produced 32.7 million barrels in May; Alaska, 21 million; and California, 17.7 million. Total U.S. production for the month was pegged at 162.2 million barrels, Energy Information Administration figures show.

North Dakota's oil production accounts for about 2 percent of total U.S. crude oil production, the Energy Information Administration said. That's grown from 1 percent less than two years ago, said Ness, whose Bismarck-based group represents about 160 companies working in the state's oil patch.

North Dakota has risen from being the ninth-largest oil-producing state in 2006, but would have to triple its monthly production to become No. 3.

"Never say never, but we could catch California," Ness said. "We certainly didn't see this one coming. And with the improved technology and if the business climate stays friendly, who knows?"

Congrats ND. With all that oil you could in 1 year of records output, supply the US with oil for 3 days. I'm sure that 8/10ths of 1 % of our annual consumption will make a big dent. The Saudi’s can produce 60M Barrels in 3 days. Nice job ND. Way to make a dent!

Here is a real article on the Bakken shale and Threeforks.

http://www.bexp3d.com/bakken_breakout.pd....

Dent? Maybe, but it will be the biggest U.S. onshore oilfield since East Texas. My new avatar is the old picture of the 1901 first Gusher at Spindletop.

http://en.wikipedia.org/wiki/Spindletop

And ND will be out-producing the North Slope within a few years.

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And ND will be out-producing the North Slope within a few years.

I hope so. Whats the water cut at Prudhoe Bay? Last I heard it was 75%