“A slow sort of country!” said the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” — Through the Looking-Glass, by Lewis Carroll
The Red Queen’s race has been used as a metaphor in many diverse contexts, and is also well-known in the oil patch. The U.S. is producing more crude oil than it has since 1988, about 7.8 million bpd. The U.S. Energy Information Administration (EIA) estimates that 29% of it comes from tight oil regions. Among these, North Dakota’s Bakken shale has been a true champion. Recent figures from the state’s Department of Mineral Resources reported a flabbergasting 911,000 bopd, almost 30% higher than the same time last year. The Bakken is headed for a million bopd, and it’s hard to imagine anything stopping its dizzying ascent.
However, the chart on this page, published by EIA, illustrates the Red Queen’s dilemma. It shows projected change in Bakken crude production from November to December. Note the precipitous increase of 89,000 bopd from newly completed shale wells. That’s up from an estimated October-November increase of 86,000 bopd, so production is not only rising, it’s accelerating. The middle bar tells the other half of the story: older “legacy” wells are losing production at a steep rate. The loss of 63,000 bopd brings the net increase to a “mere” 26,000 bopd. And, despite a climbing rate of production increases, the decline is likewise picking up speed—loss from legacy wells in the previous month was 60,000 bopd, meaning the rate of increase is still impressive, but then it has to be.
Skeptics have been jumping all over these numbers. The folks over at the Oil Drum website (recently discontinued) have been particularly vociferous in criticizing the “Bakken gold rush,” calling it a “game where the media is the referee, and the public doesn’t know the rules.” Norwegian energy writer Rune Likvern warned: “Technology and/or price cannot overcome the inevitable fact that field size and well productivity [will decline] in most plays, whether in shale or any other…. Shale plays do not get a pass on the laws of physics…”
Looking at legacy wells’ high decline rates, one might see the critics’ point. It has been estimated that the U.S. will have to drill 6,000 new wells per year just to stay at current production, using current technology. As the focus shifts even more to shale, that target number may have to rise, too. Production declines in shale formations vary from area to area, but in general, you can see a 60%-70% decline in the first year, compared to traditional wells, which can take two years to decline 50%.
Continental Resources, which sparked the Bakken boom in 2004 with its Robert Heure 1-17R well, isn’t standing in place. The company plans capital spending of $4.05 billion next year to meet its goal of a 38%-40% production increase. Of that, $2.505 billion is slated for the Bakken. The company is reportedly testing tighter 360-acre and 160-acre spacing. This practice raises production but also elicits concerns about depleting resources too quickly.
EOG Resources recently reported improved results from 160-acre spacing on some of its Bakken wells. EOG also has been increasing the length of its laterals and the number of fracture stages. This, combined with better fracturing technologies, has effectively tripled the amount of oil and gas recovered over a well’s lifetime. Recent completions have had IP rates between 2,120 and 2,685 boed.
Crowded house. The question of wellbore spacing is a related issue. How close can two wells be to each other, before they begin to interfere, lowering the production of each? In hydraulic fracturing, 600-ft wellbore spacing is a fairly common practice, but some operators have experimented with 300-ft spacing.
Kevin Thuot at Drillinginfo analyzed drilling data in the Bakken, to try and determine if well spacing had a detrimental effect on production. He compared data from pairs of wells drilled by the same operator at least six months apart. Logic would suggest that if interference occurred, the secondary well would produce less than the primary well over a given period. It was found that well interference occurred when wellbores were spaced less than about 2,000 ft apart, and secondary wells produced at 85% of the rate of the primary in the tightest spacing. When spacing was greater than 2,000 ft, the situation was reversed: secondary wells generally out-produced primary wells over a six-month period (as operators gain experience and drill more productive wells).
When comparisons were made for 12 months of production from wells drilled at least 12 months apart, the trend was more pronounced, with 2,000-ft spacing, again, being the breakpoint. In these cases, the secondary wells with the tightest spacing produced at 70%-80% of the primary rate. Over 24 months with wells drilled 24 months apart (a small dataset) the trends continued, but with 60% secondary production from the tightest spacing.
Closer spacing, pad drilling and longer, better laterals are all contributing and competing factors in the ultimate life of the Bakken shale play. However, will “all the running you can do” be enough? 
|
