Thursday, April 10, 2008

US proven reserves increase 15% with new Bakken assessment

Assessment of Undiscovered Oil Resources in the Devonian-Mississippian Bakken Formation, Williston Basin Province, Montana and North Dakota, 2008 Click on the pictures for larger view.

Using a geology-based assessment methodology, the U.S. Geological Survey estimated mean undiscovered volumes of 3.65 billion barrels of oil, 1.85 trillion cubic feet of associated/dissolved natural gas, and 148 million barrels of natural gas liquids in the Bakken Formation of the Williston Basin Province, Montana and North Dakota.

This is a lower figure than I had guessed. However, it is 24 times more than the 1995 estimate of 150 million barrels and 6 times more recent quotes of 600 million barrels. It increases the US assessment of October 2007 from 42 billion barrels to 45 billion barrels a 6.7% increase. This is a probable [50% probable] reserves number as the old proven [90% likely] reserve number was 21 billion barrels Proven reserves increases by almost 3 billion barrels. The 95% figure was 3063 million barrels of oil. The old proven reserves was 150 million barrels. So the US proven reserves number goes up to 24 billion barrels a 15% increase. Adding almost 2 years to the 12 year life of US reserves based on proven reserve calculations.

As technology improves I would expect the recovery rates to increase.

Here is the fact sheet

The assessment methodology of the USGS

USGS 1995 study and current decline rates

Estimates of bakken oil size and timing

Multistage fracturing horizontal drilling technique

Here is more details on how horizontal drilling and fracturing work

Bakken oil not fully valued

Bakken oil is highly profitable

A Saudi Arabia of oil in Bakken and Toquay formations in the USA and Canada

Other methods of resurrecting old oil wells. 67% of US oil is still in old wells and needs new technology to help recover it.

More bakken news from Google news

USGS 2001 Bakken assessment

Still waiting for todays release of the updated USGS Bakken study, Here is a 2001 geological assessment.

The 2008 assessment is 3.65 billion barrels of technically recoverable oil.

Diagenesis and Fracture Development in the Bakken Formation, Williston Basin: Implications for Reservoir Quality in the Middle Member, By Janet K. Pitman, Leigh C. Price, and Julie A. LeFever, U.S. Geological Survey Professional Paper 1653

The Upper Devonian–Lower Mississippian Bakken Formation
in the Williston Basin, North Dakota (fig. 1), is a closed, low-permeability petroleum system that generated approximately 200 to 400 billion barrels of oil in place. Most of this generated oil was expelled into very fine grained sand-stones and siltstones within the middle member, which is bounded by organic-rich shales that are both sources and seals. Source-rock thickness, thermal maturity, and total organic carbon (TOC) contents controlled the amount of oil generated and expelled from the shales.

The middle member of the Bakken is an oil reservoir in the thermally mature part of the basin and has been extensively cored; thus, it offers the opportunity to examine the major controls on reservoir quality.

Reservoir porosity of sandstones and siltstones in the middle member is poor, varying from 1 to 16 percent and averaging about 5 percent. Under in situ conditions, porosity is as low as 3 percent. Most porosity in the middle member is associated with open, hydrocarbon-generated fractures; some secondary porosity caused by organic acids is also associated with fractures. Permeability in sandstones and siltstones ranges from about 0 to 20 millidarcies and averages 0.04 millidarcies. Permeability values greater than 0.01 millidarcies are associated with rocks that have high residual oil saturations and a high incidence of hydraulically induced fractures. Most oil in the Bakken petroleum system resides in open, horizontal (bedding-parallel) fractures and in secondary micro-porosity adjacent to fractures, with only small amounts dispersed in matrix pores. Horizontal fractures form a pervasive network in deeply buried reservoir rocks with high residual oil saturations, but they are generally absent in shallowly buried rocks with little to no residual oil. These fractures resulted from superlithostatic pressures that formed in response to increased fluid volumes in the source rocks during hydrocarbon generation. Unlike mineralized fractures that are incapable of transmitting fluids, porous and permeable horizontal fractures serve to focus hydrocarbon fluids and locally enhance the quality of oil reservoirs at depth.

An article about bakken oil drilling activity in South Dakota.

Kansas has a two page summary of the Bekkan formation.

The U.S. Geological Service said it would release its findings this afternoon on the service’s Web site,

“Hundred-dollars-a-barrel helps offset the risk,” said geologist Julie LeFever, who has spent decades researching the Bakken for the North Dakota Geological Survey. “But if the price drops through the floor, most of the drilling would be over. The bottom line always is economics.”

Horizontal drilling and the modern fracturing techniques used to collect the crude cost about $6 million per well — six times the expense of a vertical well. But Ness said a horizontal operation, if successful, can produce many times the oil.

He compared the method to excavating the creme filling of an Oreo cookie from the side rather than by drilling several holes from the top.

Monday, April 7, 2008

USGS study to be released Thursday, April 10, 2008

USGS Bakken recoverable oil study will be released thursday, April 10, 2008

MDU Resources getting 800 barrels per day from each of two new Bakken oil wells

MDU Resources Group, Inc. (NYSE:MDU) has announced that its indirect wholly owned subsidiary, Fidelity Exploration & Production Company, recently completed its first two operated wells in the middle Bakken formation in Mountrail County, N.D.

After the fracture stimulation treatment, the Annala 11-36H well’s average production over the past five days was 838 barrels of oil per day. The well is flowing up 7-inch casing on a 22/64-inch choke. Fidelity has a 65 percent working interest in this well.

The Fladeland 11-21H well has been fracture stimulated and began flowing to production facilities on April 4. Over the two-day period, the well has produced a total of nearly 1,800 barrels of oil up 7-inch casing on a 24/64-inch choke. Fidelity has a 32 percent working interest in this well.

“We are pleased with the initial results and are still recovering load fluid from the fracture stimulation treatment, but the initial rates from these wells are strong,” said Terry D. Hildestad, president and CEO of MDU Resources Group, Inc. “Based on this early success, we have added a third rig and are presently looking at opportunities to further accelerate our drilling of the Bakken acreage for the remainder of the year.”

Thursday, April 3, 2008

While waiting for the USGS Bakken oil field report

Bakkenshale blog has a couple of useful tables that analyze the decline in production for wells that are being drilled in the Bakken oil formation.

The initial production (IP) decline chart with cumulative production thru January 2008 shows the average production over a longer period is about 60% of what is produced in the first month.

There is a discussion group on Bakken oil.

You need 18 to 24 months of production to get a good feel for what a well is going to ultimately produce.

It appears that if you average the first 2 to 3 months of "flush production", the typical well might be producing 50% of this average amount in 10 months to a year. After 15 to 18 months in appears production has leveled off at a rate of about 25-30% of the first 3 month average (with little regard to the IP rate). Hopefully the decline from this point forward will hold at about 10%-15% per year.

The obvious exception to the scenario is the Petro-Hunt USA 2D in the Charlson area. It's reported IP was 700 barrels per day. It's 16 month total production is 378,536 barrels and the most recent month production was 1000 barrels per day.

Other cautions on every well: did they stay "in zone" while drilling; did the zone get damaged while drilling; did the direction of the lateral section optimize natural fracturing, did the frac job get into the intended zones, and on and on. We'll all be wiser in a few years as this data base grows and learning curve goes higher.

This is a play brought on by technology: horizontal drilling and fracing. Both of these will only get better and we've just scratched the surface of the Middle-Bakken potential. Who knows where the Three Forks will take us.