[dcoyne78]

Hi Rockman,

Currently the average Bakken Well produces between 300 and 350 kb over its life. The NDIC estimates between 40 and 45k locations, about 8000 have been drilled so far. I fully expect that if there is no severe recession oil prices will remain at an annual average price of over $90 per barrel.

So let's be conservative and assume 25,000 wells at 300 kb per well and that the oil price assumption (which I believe is quite conservative) is correct. That adds up to 7.5 Gb of oil from the North Dakota Bakken/Three Forks. Note that the breakeven oil price for a 300 kb well is about $80/barrel in the North Dakota Bakken.

Generally the EIA forecasts for oil prices have been too low, 10 years ago they were forecasting $25/barrel in 2002 $ which is about $32 in 2013$ so they were low by a factor of 3, now they are forecasting about $110 in 2023 (2013$) so if they are low by a factor of 3 again the price would be $330/barrel (which I doubt), but I wouldn't be surprised if they were low again, now you may expect prices will fall sharply, if so I think that is incorrect.

Those who refuse to predict anything, will never be incorrect of course, nor will they be correct. The EIA now gives a high and low scenario (several in fact) which they did not do 10 years ago. I doubt that the annual average oil price will fall outside the low and high estimates (which range from $80 to $200 per barrel in 2025.

Note that most of the wells will be drilled by 2025, the production until 2040 is the tail which does not require very high prices as the drilled wells are a sunk cost at that point and oil will be pumped as long as it pays OPEX, royalties taxes, and transport costs.

[dcoyne78]

Hi Rockman,

Another quick note on the EIA price predictions. The EIA almost always forecasts too low a price, so the AEO reference case oil prices will probably be too low rather than too high.

Since 1994 the AEO reference case underestimated the future nominal oil price in 82% of the possible cases, an unbiased estimate would underestimate about 50% of the cases.