North Dakota hits record oil production
The North Dakota Bakken produced an average of 911,242 b/d in August, up from an average of 875,736 b/d in July — the previous record, according to the state's Department of Mineral Resources. This nearly doubled the number from two years ago of 446,000 b/d.
The state also produced an average 1 MMcfd of natural gas in August, up from 972 Mcfd in the previous month. Most production came from the Bakken and Three Forks tight oil formations. The state hit a record 9,452 producing wells in August.
Bakken pipeline restarts operations
San Antonio, Tex.-based Tesoro Logistics LP restarted its Mountrail County North Dakota pipeline following a shutdown at the end of September after a small diameter hole spilled an estimated 20,000 bbl of oil. The company reported that the hole was likely caused by an electrical charge, the cause for which is still under investigation. No corrosion or other defects were detected at the failure location.
As of October 31, more than 4,500 bbl of oil had been recovered from the site. In addition, the incident caused no injuries or known impacts to water or wildlife in the area. Remediation was under way at the time of this writing.
The company conducted testing at six different locations on the pipeline along the 35-mile section from Tioga to Black Slough, ND. In addition it has installed additional integrity monitoring equipment and online analysis to detect indications of a potential leak along the 35-mile section.
Based on preliminary estimates, the company said remediation costs for this incident were about $4 million.
Williston basin assets change hands
Natural Resource Partners LP has agreed to purchase nonoperated working interests in oil and gas properties in the North Dakota Williston basin that are producing from the Bakken-Three Forks play from Sundance Energy Inc. for $35.5 million. The deal is expected to close in December of this year.
The McKenzie, Mountrail, and Dunn county properties are being developed. The leases, which are held by production, include an interest in 77 producing wells in addition to an opportunity to participate in future development locations.
SM Energy increases Bakken production
The company has reported its Bakken production volumes grew to 14,900 boe/d in the third quarter—a 9% sequential increase from 13,700 boe/d in the previous quarter.
SM Energy completed 13 gross wells and produced 35% more oil than during the same period last year. The company said it is focusing on the Gooseneck and Raven/Bear Den areas. It has 162,000 net acres prospective for the Bakken/Three Forks but is focusing on development of 81,000 net acres.
In a recent conference call, SM Energy said it would incorporate the results of its downspacing pilot program in its year-end results. The company also is evaluating revised completion designs. A typical long-lateral completion is a 26-stage sliding-sleeve frac job that uses about 80,000 bbl of fluid. The company is running three rigs in the Bakken region.
Bakken oil feeds Pennsylvania refinery
Once slated for closure, Philadelphia Energy Solutions' (PES') 350,000 b/d Pennsylvania refinery is now processing 190,000 b/d of oil from the North Dakota Bakken. Last year, PES purchased the Philadelphia refinery, which was threatened by the high cost of imported feedstock.
The company reported that nearly 160,000 b/d of crude is delivered by two unit trains with an additional 30,000 b/d coming by rail and barge. The refinery is processing a fifth of the oil produced in North Dakota's Bakken shale.
Bakken operator reduces well costs 18%
In the third quarter, Hess produced an average 71,000 boe from the Bakken, a 14% increase from the same period last year. It expects to continue producing from 64,000 to 70,000 boe/d through the end of the year.
The company announced an 18% drop in wells costs in the Bakken. Hess is known to have the highest well costs in the region. But the company said its spending had dropped to an average of $7.8 million/well within the last quarter, which was down from $9.5 million/well in the same period of last year.
In addition, the company cut its drilling cycle by 3 days—from 27 to 24—and spent less on hydraulic fracturing. In comparison, Continental Resources Inc. spends an average $8.2 million on its Bakken wells, and Whiting Petroleum Corp. reported costs ranging from $7 million to $8.5 million/well in October.
