Monday, March 21, 2011

Continental: Bakken's Giant Scope Underappreciated

by OGJ editors, OGJ, Feb 16, 2011
The Bakken play [please see map below -- D.R.] in the Williston basin could become the world’s largest discovery in the last 30-40 years, a senior manager at Continental Resources Inc. said Feb. 16.

Ultimate recovery from the overall play is now estimated at 24 billion bbl of oil, compared with US reserves of nearly 20 billion bbl, he told the NAPE Expo in Houston.

The 24 billion bbl figure is five times the US Geological Survey’s 2008 estimate and compares with the 151 million bbl the survey put forth as recently as the mid-1990s, said Jack Stark, Continental senior vice-president, exploration (OGJ, Apr. 21, 2008, p. 37).

Close to 2 billion bbl of the 24 billion will come from the underlying Three Forks [region], which Continental helped prove to be a separate reservoir, Stark noted (OGJ Online, July 10, 2008).

The increases resulted as technology evolved over a 20-year span from marginal or uneconomic vertical wells to open hole stimulations in single, dual, and trilaterals to liners with staged fracs that are resulting in 50% rates of return today, Stark said. Industry also began drilling into the Middle Bakken dolomite, which is more porous and permeable than the upper and lower Bakken shale source rocks.

Production exceeds 400,000 b/d including Montana and North Dakota, Stark estimated, and smaller volumes are being produced in Canada. So recovery of that volume of oil will take years.

Industry has completed 2,750 horizontal wells since 2000. It is running 165 rigs that likely will drill 1,800 more wells in 2011, and production could reach as much as 1 million b/d within a few years, Stark said. The Bakken is continuous under nearly 15,000 sq miles.

The play’s numerous operators are drilling 18,000-21,000-ft wellbores that include 9,500-ft laterals and applying 18-30 frac stages/well, said Stark.

In general, higher initial potential producing rates indicate higher estimated ultimate recoveries, but the correlation isn’t 1:1 “due to overriding geological factors,” he said. Operators seem to reach a point of diminishing returns between 18 and 24 frac stages and are still seeking the ideal number of stages, he said. [Full story]

(The Bakken formation was discovered in 1953 and as early as 1974, it was postulated that vast amounts of petroleum were contained in the formation itself but it was not economically viable as the oil was trapped in shale, i.e., fine sedimentary rocks. With the development of new drilling techniques, it became possible to horizontally drill right into the flat shaped deposits and collapse the oil rich rocks by fracking---i.e., pumping sand/proppant and liquids at high pressure into the well bore---in order to allow the oil to flow back up. Applying new drilling techniques alongside higher oil prices made it economically viable to exploit the oil trapped in the Bakken shale as well as other formations such as the Cardium in Alberta and the Viking in Saskatchewan. Armed with the same proven technology, the industry has now set its eyes on the Southern Alberta Basin. With its similarities to the Williston Basin, the companies are excited about the potential of this new emerging light oil play dubbed: The Alberta Bakken, stretching from Southern Alberta into Montana---please see blog here. Wood Mackenzie's Upstream M&A Service report "2010 in Review and the Outlook for 2011" shows that US shale gas in particular had an exceptional year in 2010 - continuing a steady increase in deal activity over the last five years - with acquisition spend amounting to US$39 billion, equivalent to 21% of all global merger and acquisition---M&A---activity. Also, "2010 ended with a flurry of shale oil transactions, centered on the Bakken play where we anticipate further activity in the coming year. In the last two months of 2010, there were four US$1 billion plus Bakken deals announced, pushing cumulative M&A spend in North American tight oil beyond US$15 billion," said Luke Parker, manager of WoodMac's M&A research---please see my post here. -- D.R.)

             Map of the Bakken Formation Oil and Gas Play

Source: here. Description: The Bakken is below parts of northwestern North Dakota, northeastern Montana, southern Saskatchewan and southwestern Manitoba.

No comments:

Post a Comment