WoodMac: Bakken drilling, completion capex to top $15 billion in 2014

Oil and gas industry analyst Wood Mackenzie Ltd. forecasts that operators in the Bakken shale will invest more than $15 billion on drilling and completions in 2014, second only to the Eagle Ford in the US Lower 48 states.

The Bakken and Three Forks formations hold close to $118 billion in remaining value. WoodMac believes operators will recover more than 20 billion bbl of oil reserves throughout the life of these plays, despite concerns over infrastructure constraints.

“We expect Bakken and Three Forks oil production to average 1.1 million b/d in 2014, growing to 1.7 million b/d in 2020,” says Jonathan Garrett, Americas upstream research analyst for WoodMac.

After analyzing twelve sub-plays in both the Bakken and Three Forks, WoodMac offered these key findings:

• Bakken well costs continue to fall. Pad drilling is increasing drilling and completion efficiencies. Bakken and Three Forks wells now cost on average $7-8 million/well, down from more than $10 million/well before 2011.

• The Nelson anticline sees the highest initial production (IP) rates, averaging 1,000 boe/d. However, the Fort Berthold sub-play has the highest estimated ultimate recovery at nearly 700,000 boe.

• Three Forks is the primary drilling target in the Southern Fringe sub-play. Three Forks wells have outperformed those in the Bakken in this sub-play and in the North Williston and Williams Perimeter sub-plays.

• Continental Resources Inc., Oklahoma City, remains the top operator in the Bakken, with more than 1.2 million acres, the largest remaining reserves, and the most advanced delineation program in the deeper Three Forks benches.

• Some operators with smaller acreage positions like WPX Energy Inc., Tulsa, have more valuable positions on a per-acre basis. Some of the most valuable positions are concentrated in areas such as Fort Berthold.

• Crude-by-rail now accounts for more than 73% of crude leaving the Williston basin. Total rail capacity is at 1.2 million b/d, compared with 783,000 b/d for pipelines and local refineries.

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