2013 June 14

The Master Resource Report  2013-06-14

Bakken production continues to slow

The North Dakota Industrial Commission, Department of Mineral Resources released oil production data this morning. Next week the report will take a deeper look at the information but for now here are some key points to consider.

  • The rig count in the state remained flat.
  • Currently 184 rigs operating (all-time high 218 May 2012)
  • Permits for new wells in May was 211 (all-time high 370 Nov. 2012)
  • The number of state wide wells producing is at a new all-time high of 8,758
  • State wide oil production hit a new high of 793,249 barrels per day in April
  • State wide production increased 10,250 barrels per day from March
  • The number of wells waiting on completion climbed to an estimated 490
  • Sweet crude price averaging around $87 per barrel (≈$10 discount to WTI)
  • Over 95% of drilling is occurring in the Bakken/Three Forks

Since all the activity is in the Bakken here is some Bakken specific data.

  • Bakken production rose 8,282 barrels per day to 727,149 up 1.2% over March
  • Production was up 180,307 barrels per day year-over-year or 33%
  • The producing well count in the Bakken climbed to 5,617 up 47% year-over-year
  • Daily oil per well continued the decline that has been in place since the end of Oct. 2012
  • Daily oil per well fell to 129 barrels per day from 144 barrels per day one year ago

Next week the report will take a look at these trends paying close attention to the apparent decline in well productivity. During the period beginning January 2011 through December 2012 the average monthly addition of new Bakken oil production was 18,709 barrels per day. Since October of 2012 when daily oil per well began to decline the average monthly addition of new oil is 7,215 barrels per month for the Bakken based on the data provided by the state. This is despite the continued addition of 150 new producing wells each month. If that average of new oil production add per month remains in place the Bakken will not reach 800,000 barrels per day of production by the end of 2013.

One thing is clear – North Dakota is not the New Saudi Arabia.

Natural gas rig count down 1

Natural gas prices have essentially doubled from year ago levels yet the number of rigs drilling for natural gas is down 209 from 2012 levels according to the latest Baker Hughes data released today. So why haven’t these “higher prices” increased drilling activity? Could it be that the price still isn’t high enough?