[shallow sand]

I'd say based on Whiting Petroleum's second quarter report, we have seen peak North Dakota Bakken production. Whiting is the number one producer in the North Dakota Bakken.

Although Whiting's release was company wide, vast majority of their production is in Bakken of ND. They produced 170K BOE per day in Q2. They forecast that to fall to an average of 153K BOE per day in Q4 and hope to average 146K BOE per day in 2016, assuming oil prices stay low.

They will spend $2.15 billion in CAPEX in 2015, but already spent $1.56 billion of that in the first half of the year. After completing 186 net wells in the first half of the year, will complete 65 range in second half of 2015.

Surprisingly they spent more CAPEX per well in Q2 than Q1 of 2015.

The kicker, they spent $2 in CAPEX for every $1 in free cash flow in Q2, yet production only raised 2%. To be cash flow neutral and keep production at 170K BOE per day I estimate Whiting needs $90-95 WTI oil price.

If you do not believe me, go look at their website yourself. $90+ is the breakeven for Whiting to maintain 170K BOE per day. Since WTI is in the high 40s, their production is going to shrink. They are pulling two more rigs from the Bakken.

SM Energy is also pulling two rigs from the Bakken and will see production drop.

Hess is apparently going to continue to burn cash in the Bakken.

Next week will see what Continental and Oasis report.

[Tanada]

Here is a fracked well production history graph. 2007 and 2008 fracking produced almost nothing in terms we chat about around here.
2009 had a very minor bump that has faded back to 2007-08 production levels.
2010 showed a substantial uptick in fracked shale production but that to has now fallen back down to near 07-08 production levels.
2011 Was nearly twice as high as 2010 and as a result is still producing a measurable quantity of oil, though it is down about 80 percent from its peak.
2012 Was really impressive, but three years later those wells are down about 65 percent from peak production.
2013 Very high rates of production as everyone and their brother in law was drilling as fast as they could, now down about 50 percent from their peak production.
2014 Junk bonds and people throwing good money after bad pushed shale production to bring the USA within reach of the all time 1970-71 record production rates peaking in December. Less than a year later we are down about 30 percent from 2014 well production.
2015 The carry over in 2014 production allowed the early drilling and completions to push production up slightly, but the large reduction in drilling rates due to low prices are already starting to show a substantial decline in total production by May 2015 when the graph ends.
http://1dhqyu3drpye39jm482ecnjl.wpengin ... -fig-4.png

[ROCKMAN]

Well done, T. This type of graph is so handy to counter the cornies who only want to focus on initial production rates since the latest drills tend to hide the declines of the older wells. For them the reality truly does bite. LOL.

[Subjectivist]

The more I look at this chart the more worrisome it is. Look at how small the new 2015 production coming online is, and remember a lot of those wells were drilled late last year and are slowly going into production. That means the backlog should be just running out now and wells from here on are those drilled at the much slower 2015 rate. Anyone happen to know how current rates match up with 2010 or 2011 drilling and completions?

image.jpg

[Tanada]

Excellent chart. Peak oil is now.

I am fairly confidant USA secondary/tertiary peak is now. For the world as a whole, we don't know for sure yet. If Pops is correct that all of the effective gains in the last five years are USA LTO then our peak will also be world peak, but we still have not seen a sustained drop in Conventional Oil. In my mind we are not peaked out until conventional world oil goes into unrelenting decline.

[ROCKMAN]

T - If one accepts this analysis the world has been at PO for a few years.

http://euanmearns.com/a-new-peak-in-con ... roduction/

But that still assumes no future significant discoveries.

[Tanada]

The Bakken has been in production for a very long time back to the days of simple vertical wells fracked with dynamite charges at the bottom of the bore hole. Drilling there has fallen between 50 and 60 percent from the mad pace of last September, but there are still plenty of spots to be drilled at $50.00/bbl.

[Pops]

Just saw this by David Hughes about bacon predictions
http://www.scribd.com/doc/281383932/Tig ... gy-Outlook

And this on all the other pipelines that aren't XL, specifically a pipe to take LTO North to mke dilbit
http://www.theguardian.com/environment/ ... ranscanada

And this one specifically about the new bakken pipe to move LTO to the SE (not XL) http://www.desmoinesregister.com/story/ ... /72630434/

[hvacman]

First, I think Keystone XL's un-built Canadian/US crossing is more about flowing Alberta tar sands diluted bitumen (dilbit) into the US than about ND Bakken LTO. The XL pipeline permit issue is all about the environmental impact of burning that "dirty" bitumen.

Second, as the Rockman has frequently pointed out, the "key" pipeline connections for opening up dilbit flow from Alberta to the US have already been made - down in OK and TX where there were bottlenecks to the Cushing OK hub and to the refineries on the Gulf coast. There are so many options for flowing the dilbit through the US down to Cushing now - alternative pipelines + rail - that the only people really affected by the federal XL permit are the owners of that particular portion of the un-built pipeline. No pipe line, flow through THEIR pipes and no revenue for THEM. Instead, other pipeline owners + the railroads get the transportation revenue.

[ROCKMAN]

To follow up on Pop's excellent post here's the web site of the folks planning to build a Bakken pipeline that has nothing to do with KXL. And to follow up on the h-man's comment: every bbl of the record volume of Canadian oil being produced is currently being exported to the US. Given the slide in oil prices and the delay/shut down of various oil sands projects it's not difficult to imagine there is already excess capacity in the transport system and that it will increase as long as prices stay lower. Remember how big expensive pipelines are built. It isn't on speculation: the builders first get commitments from potential transporters. And that subscription process has a time window. It's been quite a while since I've seen an update but long before the oil price drop the pipeline builders kept pushing out the date further and further because they lacked enough subscribers to build the northern portion of KXL even if they had been granted the permit.

Most folks don't really understand how this process works. Yes: the pipeline folks kept bitching about the lack of the permit. But they've never had a sufficient subscription to justify building the line. Now with lower oil prices and a decrease in activity how many oil transporters are going to make financial commitments to building a pipeline for which there is no demand? Perhaps there hasn't been public announcement but the northern portion of KXL died when oil prices fell many months ago. It stopped being a part of the dynamics in early 2015. Which make all the comments now from Hillary or anyone else seem rather silly IMHO.

[zoidberg]

Easy political points without risking any action on her part maybe

[ROCKMAN]

zoid - Fair enough for the D's to pay the same game the R's do when it fits their agenda. It's no wonder so many of our citizens don't really have a clear picture of many of the problems we're facing as both sides of political fence go out their way to keep the public under-informed if not outright ignorant.

[Tanada]

Just thought I would share. Wrote this in another thread:

Previously fractured uncompleted wells can be measured as "spare capacity," as the area around the borehole has measured potential to produce hydrocarbons (at a given appropriate market price level.) In the strict sense of the word each and every shale borehole is it's own unique reservoir (note*), drawing from a unique portion of a larger trend --- the constrained region around the borehole previously fractured by the liquid injection. So yes, some shale LTO is space capacity.

Of course the unfractured regions are not part of any reservoir, can not be measured or booked as a reserve so of course can not be "space capacity". Because until fracturing there is no reservoir.

note*: It truly meets the definition of a reservoir. ("defined as a subsurface pool of hydrocarbons contained in porous or fractured rock "). However the rest of the trend which is neither porous or previously fractured (by the operators or nature) can not be considered a reservoir. The rest of Bakken is not spare capacity.

I don't buy it, a fractured well has already had all the money invested in it needed for extraction and revenue. Why would any company in this low price regime sit on a well that could be producing some sort of income stream during this time of desperation?

[ROCKMAN]

"Why would any company in this low price regime sit on a well that could be producing some sort of income stream during this time of desperation?" Perhaps there’s a misinterpretation of what's being said. While some companies might delay frac'ng a well BEYOND THE NORMAL WAIT TIME for a frac crew I still haven’t seen any specific numbers indicating how common an occurrence this might be. And I mean numbers coming from the companies that are intentionally delaying frac’ng. Normally 3 to 6 months pass between when a well finishes drilling (and that rig is no longer part of the active rig count) and it is frac'd, production equipment installed AND begins producing.

But that’s a very different situation then a drilled and frac’d well with production equipment in place that isn’t being produced. We have a very specific category for such wells: it is a shut in producer. A producer whether it’s producing 1,000, 100, 10 or 0 bopd. It can happen but very rarely does an operator shut in a producing well or even cut back production in hopes of higher prices down the road. It’s actually much more common for companies to do whatever they can to increase production in the face of falling oil prices.

There’s been a lot of talk about companies delaying frac’ng while waiting for higher prices. I’ve yet to see one company state that they are doing this. Did I miss one? I know there have been a lot of folks saying it’s been happening but none of them are in the oil patch. So the Rockman thinks it’s time for some nut cutting: someone who believes there are a lot of potentially good wells DRILLED that are sitting idle waiting on higher oil prices before they are frac’d let’s see some DOCUMENTED PROOF. That’s PROOF…not speculation or theories…PROOF.