OIL BOOM: Signs of maturity emerging in the Bakken?

OIL BOOM: Signs of maturity emerging in the Bakken?  (Thursday, September 19, 2013)

Nathanial Gronewold, E&E reporter

HOUSTON — An industry consultancy says it’s seeing signs that crude oil production from the prolific Bakken Shale could be nearing a peak.

Some operators actively drilling in the region are still showing strong returns from some wells recently completed. But the market research firm IHS reported yesterday that the industry is beginning to see the Bakken as a “maturing play,” industry parlance for a field that’s starting to max out on its productive potential with existing technology and market conditions.

The reason for this view, said market research director Andrew Byrne, is that companies are increasingly reporting weaker volumes flowing from newer wells compared to the earliest Bakken projects.

The picture looks similar in the neighboring Three Forks formation, he said.

Byrne reported his company’s outlook for the Bakken during a talk at the IHS Forum gathering underway this week in Houston’s Energy Corridor.

“Overall average well performance is going down,” Byrne said. “Not all companies are experiencing that. Some are bucking the trend.”

But he said operators are definitely noticing a trend toward lower production from newer wells in the Bakken. Talk regarding future development in the Bakken also shows signs that industry is beginning to see the oil patch as maturing, and that production could peak soon if the current trend continues.

One sign is that active Bakken operators are becoming more focused on lowering their per-well development costs, he noted. They’ve already had success in these efforts, reducing average costs from $10.5 million to around $8.2 million, with some companies speaking about potentially pulling costs even lower.

IHS analysts also see companies beginning to try out newer technologies and techniques in the Bakken in attempts to achieve higher production rates, a possible sign that companies view current methodologies as reaching their limits for the volumes of oil and gas that they extract from the tight formation. Byrne said that talk he’s hearing regarding developing technology that could lead to a “Renaissance in the Bakken” suggests many companies are beginning to see that field as close to being played out.

Byrne cautioned that there could be other reasons to explain the drop in initial production from new wells.

The declining well performance recently seen could simply be a consequence of firms moving more to the Bakken’s periphery and away from core areas where production is higher. Companies may be taking the opportunity that high global oil prices afford them to experiment with newer regions. Most are discovering lower-producing regions on the Bakken’s edges, Byrne said, but some companies have achieved impressive performance in a small number of wells.

 

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EnergyWire is written and produced by the staff of E&E Publishing, LLC. EnergyWire provides comprehensive coverage of the political, legal and business issues surrounding the rapidly evolving unconventional energy landscape. EnergyWire publishes daily at 9 a.m.

 

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