The Bakken Shale| October 2020
Named after Henry Bakken, the farmer who owned the land where oil was originally discovered, the Bakken Shale is located in North Dakota, Montana, Manitoba, and Saskatchewan. The USGS estimated in 2013 that this basin has an expected ultimate recovery of 7.4 billion barrels. North Dakota Department of Natural Resources put the break even point at US$46/bbl (2020). The top formations within the region are the Three Forks and the Spanish formations.
State Drilling Statistics (End of October)
Total Rigs in North Dakota- 11
Total Rigs in United States- 296
Total U.S. Rigs down 65% YTD
Bakken Top Producers
Top Gas Producer- Continental Resources, INC.
Top Oil Producer- Continental Resources, INC.
Financial & Economic Updates
Slowly But Surely
Although the numbers are slow to report, North Dakota’s oil output soared 14% in August and showed signs of climbing slightly more in the near term. North Dakota Mineral Resources Department Director Lynn Helms celebrated the improvement, but noted that the increased production is primarily from existing wells. Although November showed 1.52 million barrels per day in 2019, the numbers will likely be at least 300,000 shy for November of 2020. While domestic demand is slowly returning in the form of gasoline, jet fuel demand is still terrible, and the prices just aren’t high enough for new development or hydraulic fracture jobs. Helms predicts that WTI prices of $45 would entice operators to start hydraulic fracturing once again and bolster the production through the end of the year. It is uncertain if the prices will climb and hold at that level, but $17 million of the $60 million allocated for the CARES Act may still have the opportunity to find their way into operator’s pockets. The CARES Act provides federal money for COVID relief, but bad weather and legal delays have prevented much of that money from being spent. The CARES Act requires that about $17 million is used by December’s end, and Helms wants to provide grants for companies to fracture and complete new wells before that time. Still, this is just another short term solution as fracturing completed wells only boosts the state’s production for about a year, and Helms says the price must reach $55 a barrel for companies to drill new wells at a profit. Either way, production is increasing, and companies are more than compliant with the 91% gas capture target that went into effect in early November, so October can be chalked up as a small victory for the Bakken gas basin.
Back to Work
Although depressed oil prices have laid off thousands of workers, North Dakota continues to find opportunities for temporary work. About 280 wells in the Bakken basin are in the process of being plugged and having the surrounding land reclaimed. This has employed about 1,000 oil and gas workers who lost their jobs earlier during the pandemic. Unfortunately, this work seems to be seasonal as winter quickly approaches and threatens to halt the process of plugging with its freeze. Department of Mineral Resources directory Lynn Helms has thankfully prepared a solution for this problem already. He was involved in a proposal to lawmakers that hopes to target the completion of about 850 drilled and uncompleted wells, or DUC wells. The plan would be to make use of money from the CARES Act that was allocated for COVID relief. Grants would be provided to operators to complete these wells, employ between 500 to 1,000 people in the process, and create between 200 to 300 jobs through the winter. This plan is built on the assumption (or perhaps just hope at this point) that WTI will be back to $45 by next spring allowing the completion of these wells to be economic, even without the grants. A few more wells are still being considered for plugging and reclamation, but these projects will only stop when money from the CARES Act and North Dakota legislature runs out.
Top Gas Producers (2020 cum)
Top Oil Producers (2020 cum)
North Dakota Production
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