How high can daily Bakken oil production go?
Or, how many wells can be drilled?
John Kemp from Reuters has been comparing the Bakken to Ghawar, asking if production from the Bakken could top 1 million barrels a day, joining an elite of highly productive global oilfields.
One key thing to understand when answering this question is the critical difference between conventional and unconventional oilfelds . In contrast to conventional oil wells, unconventional wells decline extremely rapidly, with ~50% production decline in the 1st year for each new well.
As a result, a lot of drilling is required just to replace production decline from existing wells. You have to run just to stand still. For the very same reason the maximum daily production capacity for the Bakken is really controlled by how many additional wells can be drilled in any given year.
Ultimately, the number of wells drilled annually defines the maximum production rates, and the total number of wells drilled over the entire field/area defines the “plateau” lifetime of the field.
So, how many wells can the Bakken support?
The Reuters article quotes
“At the moment the industry has completed just 5,000 wells in the Bakken at an average spacing of less than 1 well per 1,280-acre unit. But Continental estimates the core could support up to 52,000 wells with four to eight wells per 1,280-acre unit for full development.”
And that’s just for the Bakken and the deeper Three Forks 1 interval. Beneath Three Forks 1 lies additional Three Forks potential.
Taking a closer look at some recent Continental presentations indicates that they are also running pilots with 34 wells on a 320 acre plot. This gives a lateral wellbore spacing of 660’ and a vertical wellbore spacing of just 68’. Their 160 acre pilot has an even greater well density – just 330’ lateral spacing for each wellbore. The results, and implications, could be interesting.
That sounds impressive, and will extend the plateau of production from the Bakken, but will not necessarily increase the maximum production rate, unless additional rigs move in to work the area.
At the moment the North Dakota Department of Mineral Resources states that between 1,100 & 2,700 wells are drilled every year, occupying between 100 and 225 rigs (that’s 27,000 direct jobs, in case you’re interested). As of 2013, daily production is still rising in the Bakken as the result of a recent surge of rigs.
So it is possible that daily production from the Bakken could well top 1 million barrels a day. This is impressive, but getting production in excess of 1 million bpd will involve many more rigs, and many, many more wells drilled on a yearly basis.
Assuming that the total well count for the Bakken is something in the region of 52,000 wells, as suggested by Continental, that means an additional 45,000 wells vs. today. At the current 2,000 wells a year that’s going to take around 22 years to drill out. To increase production well above 1 million barrels something like double the number of wells might be need to drilled, every year. Note that when drilling finally reaches capacity and is unable to continue then there will be no new wells to replace rapidly declining ones, and in aggregate the whole “field” will effectively shut off in just a few years. Drilling twice as fast today halves the life of the “field”.
For comparison, peak production at Ghawar was 5.7 million barrels per day in 1981. Today it still produces around 5 million barrels per day, with about 3,500 wells drilled.
The Bakken story is good, but it’s not Ghawar.