North Dakota tight oil production came in at 1.1 million b/d in May (update through May 2023)

[shaleprofile + 242]

This article contains still images from the interactive dashboards available in the original blog post. To follow the instructions in this article, please use the interactive dashboards. Furthermore, they allow you to uncover other insights as well.

Visit the blog to explore the full interactive dashboard

These interactive presentations contain the latest oil & gas production data from all 18,215 horizontal wells in North Dakota that started production from 2001 onward, through May.

Total production

Oil production in North Dakota from horizontal wells came in at 1.1 million b/d, a level at which it has hovered around since 3 years ago. Natural gas production was at 3.1 Bcf/d close to a record high (toggle “Product” to gas to view this). Through May, 383 horizontal wells came online this year, far higher than the 224 horizontal wells that were completed during the first 5 months last year.

Drilling Activity & Supply Projection

After the end of Q1, when 41 rigs were drilling horizontal wells, lower oil prices have started to bite, and as of last week only 34 (horizontal) rigs were still active (according to Baker Hughes).

To understand what this level of activity would mean for future supply, simply based on the status quo in terms of rig count & efficiency and well productivity, we can look at our Supply Projection dashboard:

 

Horizontal rig count in North Dakota (top chart), and historical & future oil production assuming no changes in rig count & productivity (bottom chart).

As you can see, the drop of 7 rigs from the peak this year so far (top chart) is not sufficient yet to make production drop (bottom chart), as long as rig efficiency (2.2 wells / rig per month) and well productivity stay equal. Oil production would rise to close to 1.2 million b/d by the end of the year, followed by a slow increase over time.

Of course, all these assumptions are unlikely to hold, but users of Novi Insight Engine can set different assumptions in this interactive model for future periods. Changing the future rig count to 27 would roughly keep production flat (assuming no changes in rig efficiency & well productivity).

Well productivity

Unfortunately it does appear that average well productivity may have peaked in North Dakota, as measured by the cumulative oil production during the first 6 months:

Well productivity in North Dakota, as measured by the cumulative oil production during the first 6 months, versus production start. HZ wells since 2009 only.

In the top chart, you can find that well productivity, as measured by the cumulative oil production during the first 6 months, fell in 2022 compared with the 2 years prior. The 735 horizontal wells that came online during last year recovered 107 thousand barrels of oil during the first 6 months, on average, 2-3% below the 2020/2021 well vintages.

In the bottom two charts, you can see how well designs have changed over time. Both average lateral lengths and proppant loadings haven’t changed significantly in North Dakota over the last few years.

Gas flaring

The amount of gas flared in North Dakota has fallen to near the lowest levels in the last decade:

Total natural gas production (red) and total gas flared (orange), in Mcf/d. The map shows flaring activity in May (red is high).

The chart on the right side plots both the total amount of natural gas produced (red) and the total amount of gas flared (orange). Relative to the amount of natural gas produced, only 4.6% (141 MMcf/d) was flared in May this year, compared with 24% 3 years ago.

Terminal decline rates

Given that the Bakken is one of the oldest shale plays, it is also interesting to analyze the decline behaviour of older wells. In many well economics tools, important assumptions are made regarding the eventual decline rate, which can have a major impact on the amount of oil eventually recovered and the financials. In the following overview we can see the average production rate by well vintage (top chart) and the corresponding annual decline rate (bottom chart):

Average production rates by vintage (top) and annualized decline rates (bottom). Horizontal wells since 2008 only. Refracs excluded.

Notice in the bottom chart that initial decline rates are very steep, but gradually improve. However, you can also see that annual decline rates never drop significantly below 10%, even for older wells. The 370 horizontal wells that came online in 2008 that have not been refrac’ed have been declining at around 12% a year in recent years (black curve bottom chart), and their average production rate has fallen to 20 barrels of oil per day (black curve top chart).

Top operators

In the final tab of the interactive presentation at the top (“Top operators”), you can find the top 12 operators in North Dakota, based on recent oil production. Only Continental Resources, Grayson Mill Energy (with its acquisition of Ovintiv early this year) and Kraken Oil & Gas have made increases in total oil production recently. EOG, for some time the largest producer before 2011, does not even make this list anymore as it almost completely halted new development.

Sources

For these presentations, I used data gathered from the following sources:

• DMR of North Dakota. These presentations only show the production from horizontal wells; a small amount (about 40 kbo/d) is produced from conventional vertical wells.
• FracFocus.org

Visit our blog to read the full post and use the interactive dashboards to gain more insight: https://novilabs.com/blog/north-dakota-update-through-may-2023/