GlobalData: Flaring limits, bottlenecks to constrain Bakken shale growth

There is considerable potential to increase oil production from the Bakken shale to at least 2 million b/d from its current 1.44 million b/d, but flaring regulations and infrastructure bottlenecks are limiting production growth, according to GlobalData.

There is considerable potential to increase crude oil production from the Bakken shale to at least 2 million b/d from its current 1.44 million b/d, but flaring regulations and infrastructure bottlenecks in North Dakota are limiting production growth, according to London research and consulting firm GlobalData.

Bakken oil production is facing constraints associated with prescribed limits set by North Dakota on natural gas flaring. The state is currently flaring about 19% of the gas it produces—well above the 12% permitted by state regulations.

In a recent report, GlobalData states that in 2018, the major counties for crude oil and gas production in the Bakken shale were McKenzie, Williams, Mountrail, and Dunn—all in North Dakota. Continental Resources Inc., Hess Corp., Whiting Petroleum Corp., ExxonMobil Corp., and ConocoPhillips were the leading producers in the play in 2018.

“Bakken oil wells show competitive performances when compared to recently completed wells in the Permian basin and Eagle Ford,” said GlobalData oil and gas analyst Andrew Folse, but “to some extent, the actual potential of the Bakken play is not getting realized due to restrictions on the flaring of natural gas in North Dakota, as most of this flared gas is associated with oil-producing wells in the Bakken formation.” Folse said, “As long as gas infrastructure in the region does not expand, the pace of drilling new wells will be constrained and oil production from the Bakken will remain flat or grow at a low rate.”

The Permian basin, Bakken, and Eagle Ford are currently producing more than 83% of the country’s oil production. During this year’s first half, these three formations averaged 4.05 million b/d, 1.44 million b/d, and 1.43 million b/d, respectively. Permian production has increased by 9%, the Bakken about 1%, and the Eagle Ford has stayed constant throughout the year.

“Bakken wells exhibit the lowest breakeven price among the three shale plays at $30.50/bbl, mainly due to the exceptionally high 30-day initial production rates of over 1,250 boe/d observed in this play. Also, the Bakken total production stream is over 75% oil where the other plays are around 58%,” Folse said.

“Moreover, many Bakken operators are picking up the trend of drilling longer laterals and experimenting with completion designs. Companies are drilling laterals up to 12,000 ft. The general objective remains to increase the productivity of the new producing wells in a higher proportion with respect to the cost increase associated with these more complex wells,” he said.

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