Trending in the Williston: More U-Turn Well Permits
Permitting and drilling activity has remained steady in the Bakken region, showing resilience despite market volatility and geopolitical tensions affecting commodity prices.
Producers in North Dakota are wielding the trending technology of U-shaped lateral wells to extract additional production from the Bakken, according to state data.
Nathan Anderson, director of the North Dakota Department of Mineral Resources (DMR), said that while the uptick in extending the lateral length of unconventional wells up to 4 miles has become more common in recent years, drilling U-shaped wells is new.
“These are wells that typically go down into the Bakken or Three forks, and they drill out 1 mile and come back 1 mile, or they drill out 2 miles, make a turn and come back, in the shape of a U or a horseshoe,” he said.
To date, producers have filed 15 U-shaped lateral permits and two J-shaped lateral permits.
“We continue to see the industry finding creative ways of early completion that harnesses additional production,” he said.
Market ups and downs
The regular rig count and frac crew tallies for North Dakota’s Williston Basin held steady between March and April, despite market volatility this year that has led officials in the DMR to anticipate some activity decreases.
Anderson said during the June Director’s Cut presentation that March and April’s average crude prices at $60.68/bbl and $55.97/bbl, respectively, were 20% lower than the $70/bbl price forecast.
“We thought that there would be an activity decrease in both the rig count and frac crews, but we haven't really seen too much of a dip,” he said. “However, there's been quite a bit going on in the Middle East with tensions between Israel and Iran and now recently, the U.S.”
(Source: North Dakota Department of Mineral Resources)
Escalating tension and the apparently abbreviated entrance in the skirmish by the U.S. pushed prices into the $70s, but following reports of a ceasefire between Iran and Israel late June 23, prices have dropped back into the mid- to high $60s.
“If price stays where it is, or, or maybe even decreases slightly, I would again expect the activity level to soften just a little bit,” he said.
But estimating price isn’t just about watching the fundamentals, Anderson said.
“In the last 30 days, we’ve had oil between $60 and $77,” he said. During that time, there had been concern that energy infrastructure would be destroyed as Israel and Iran, and then the U.S. engaged in military action. Once cooler heads seemed to prevail, the oil price returned to its previous state of stasis in the mid-$60s.
“[Price] is not necessarily fundamentally driven but geopolitically driven by what’s going on over there.”
Justin Kringstad, executive director for North Dakota’s Pipeline Authority, pointed to the U.S. Energy Information Administration (EIA) report showing demand for energy remains on the rise.
An EIA supply and demand analysis shows “that the fundamentals are relatively close,” he said.
(Source: North Dakota Department of Mineral Resources)
Strong stats
Meanwhile, much of the state’s monthly statistics are demonstrating resilience.
North Dakota well permits in March totaled 94; in April, the figure was 108, and in May, there were 105 permits filed. Completion rates showed a dip, then a rebound for the period.
(Source: North Dakota Department of Mineral Resources)
The period between March and April showed a drop in transporting crude-by-rail out of the Williston, Anderson said. The decline of some 20,000 bbl/d no longer being loaded onto rail leaves slightly less than two loaded unit trains still transporting crude from the basin, mostly headed for the Pacific Northwest. About 85% of the Williston Basin’s crude is transported via pipeline and some 10% is moved by rail. The remaining 5% is refined, said Justin Kringstad, executive director for North Dakota’s Pipeline Authority.
Meanwhile, on the residue gas transmission front, the pipeline agency’s request for industry ideas on systems to move North Dakota gas from the western side of the state to the eastern side, expired June 24.
Kringstad said that once the state’s industrial commission has time to review the options, they will be presented to the public.
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