North Dakota Bakken Crude Oil

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Re: North Dakota Bakken Crude Oil

Postby Marnos » Tue Sep 01, 2015 11:27 am

gokeefe wrote:Sure, on to the next one. Just imagine how long it will take before that runs out. Probably not in most of our lifetimes.


Hard to say. You are probably right that it won't be North Dakota's last oil boom, it definitely isn't their first. Most people speculate that what is going on in ND could last 10-20 years but for all we know it could dry-up in as little as 5 if oil prices were back at $110 a barrel, given current technology.

No real predicting how long before it runs out, just depends on who you talk to. If you line all the industry experts up from end to end, they would not reach a conclusion. New reserves are continually being discovered, AND technology is making other reserves accessible which were not previously.

Ultimately, economics drive it all. Fracing is a technology that has been around since the late 40's, horizontal drilling has been around since about the 80's. However, it wasn't until oil got to around $100 a barrel that the widespread use of them became profitable.

However, both technologies have improved DRASTICALLY in the last few years. In 2011, it took about a month to drill a horizontal well. Fracing a well allowed for about 60%-70% recovery of the oil in that well (meaning 30%-40% was left in the ground). Break even point of this process $65-$70 a barrel.

These days it takes about a week to drill a horizontal well, and fracturing allows nearly full recovery. Break even point is about $45-$50 a barrel. Read an article the other day claiming its down to $30 a barrel which although technically could be true, it is unsustainable as it is resulting from the contractor doing work at well below cost right now.
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Re: North Dakota Bakken Crude Oil

Postby gokeefe » Tue Sep 01, 2015 1:40 pm

Marnos wrote:These days it takes about a week to drill a horizontal well, and fracturing allows nearly full recovery. Break even point is about $45-$50 a barrel. Read an article the other day claiming its down to $30 a barrel which although technically could be true, it is unsustainable as it is resulting from the contractor doing work at well below cost right now.


I'll bet there are a lot of OPEC nations that have seen that information (and more) that don't like what they're seeing. This is going to require a major readjustment in lifestyles for a lot of them.
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Re: North Dakota Bakken Crude Oil

Postby Marnos » Tue Sep 01, 2015 2:11 pm

gokeefe wrote:
Marnos wrote:These days it takes about a week to drill a horizontal well, and fracturing allows nearly full recovery. Break even point is about $45-$50 a barrel. Read an article the other day claiming its down to $30 a barrel which although technically could be true, it is unsustainable as it is resulting from the contractor doing work at well below cost right now.


I'll bet there are a lot of OPEC nations that have seen that information (and more) that don't like what they're seeing. This is going to require a major readjustment in lifestyles for a lot of them.


OPEC is pissed !! This current bust is a result of OPEC declaring war on American Shale Oil producer. Saudi Arabia increased production to intentionally drive prices down, thinking that it will force American Shale companies out of business. Most of their wells are conventional and costs of production are less.

American oil companies have taken a beating and are hurting, with thousands of people (myself included) out of work. Surprisingly though few of these companies have actually gone under. They are still here and they don't appear to be going away.

Meanwhile OPEC nations whose economies are so exclusively dependent upon oil business are supposedly hurting much worse. Or so the industry news would have you believe. I personally have my doubts. I have read lots of articles saying that Saudi is on the brink, that the OPEC alliance is about to break-up. However, every time they meet, they decided to keep production at current levels.

American oil industry will come back eventually, as these boom/bust cycles are really nothing new. When and for how long ? No one really thinks they have an answer.

What upsets me is that unlike steel and other industries, American oil is not protected from foreign imports through the use of tariffs, nor are they allowed to export and compete on the global market. No incentive to buy American and it is the American oilfield worker who is really paying the price.
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Re: North Dakota Bakken Crude Oil

Postby Gilbert B Norman » Thu May 19, 2016 9:22 am

An article appearing in Wednesday's Journal has laid to rest any notions that the Bakken region.is finished as an oil producer:

http://www.wsj.com/articles/shale-drill ... 1463514347

Fair Use:

WILLISTON, N.D.—Amid the abandoned worker camps, idled drilling rigs and empty field-office parking lots of western North Dakota, a shale industry reshaped by the oil-price collapse is beginning to emerge.

As the number of failed operators mounts, the surviving companies are laying the groundwork for what they forecast will be an era of slower but steadier growth in the state at the epicenter of the U.S.’s energy boom.

Cash-strapped operators are dialing back or abandoning North Dakota. But the survivors—many of which are bigger and more diversified players—are finding ways to make the Bakken Shale formation pay even at low oil prices by trimming budgets, improving field logistics and focusing on their best assets.


While Mr. Marnos will be disappointed to learn that employment will not return to "pre-bust" levels, shareholders will be happy to learn that as oil pushes towards $50bbl, that it will be profitable to resume large scale Bakken production again.

The "bust" has simply meant that the producers are becoming "lean and mean" in contrast to the free spending halcyon days.

Additional pipeline capacity seems to be "off the table" at this time, and hopefully the two major rail players, BNSF and SOO, have used this lull to strengthen their Rules for handling crude. Maybe phrases such as "boomtrain" will disappear from the lexicon.
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Re: North Dakota Bakken Crude Oil

Postby gokeefe » Thu May 19, 2016 2:23 pm

Exxon Mobil increased net production in the Bakken and another shale play in Texas called the Permian by nearly 25% last year. “With cash operating cost at less than $10 per barrel, our Bakken and Permian developments remain attractive and competitive even in the current environment,” CEO Rex Tillerson told investors on a conference call in March.


This quote absolutely buries it. That's the lowest number I've ever seen. The previous lowest cost number was $30 per barrel with a possible "future" low of $20 per barrel. Rail is by far the best logistics choice for this kind of production that may have somewhat irregular business cycles.
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