In my most recent article I stressed the value of historical production to model unconventional wells. It is not a perfect method as it does not account for all variables. Drilling and completion techniques are the most difficult to gauge. This is why it is important to compare a series of wells from one operator in the same general area. It provides a baseline. This allows focus to remain on other variables and how it affects production.
My article Bakken Update: EOG's Parshall Field EURs of 2 Million Barrels of Oil focused on consistent data points. I used EOG Resources (NYSE:EOG) for several reasons. It is a top producer with a good well design. In 2007, EOG completed a large number of wells in Parshall Field. This allowed for a comparison of wells in the same area, with the consistency of one operator. Results were consistent as IP rates improved when larger amounts of water and proppant were used. EOG continued to use short laterals throughout its development of Parshall Field. Only one well modeled below 500 MBo. Two of these wells were over 1000 MBo.
What EOG is to Parshall Field, Whiting (NYSE:WLL) is to Sanish. Whiting has been developing this area since 2006. I was unable to obtain enough on wells completed in 2007, so I expanded the chosen wells to July of 2008. This data will show Whiting has produced well results much like EOG's in Parshall. Whiting has used a wider choke which should produce higher 24-hour IP rates. Wider chokes can cause a more rapid depletion as well. EOG used only short laterals, while most other operators used long laterals. This should provide higher EURs for Whiting. This is misleading as EOG garners more resource per foot. EOG has historically used more water and proppant per foot, which should reduce depletion. Table 1 offers production rates from 10 Whiting wells completed in 2007 and through the first six months of 2008.
|Well||IP Rate||360-Day IP||720-Day IP||1080-Day IP||1440-Day IP||1800-Day IP|
In Table 1, the wells marked with an * had some production problems. This was during the flooding of western North Dakota. I didn't see any production decreases after production was resumed, so I still used the data. The numbers in bold were estimated using the average depletion of the other wells. When depletion falls below 8% the majority of production from fractures has ceased. The 6.5% is a terminal decline and should remain constant throughout the life of the well. This is matrix production, which models differently from the first few years of well life.
|Well||IP Rate||360- Day IP||720-Day IP||1080-Day IP||1440-Day IP||1800-Day IP|
I added Table 2 from my EOG article as a comparison. Whiting's 360-day depletion of 71.6% was higher than the EOG well average of 56%. EOG's depletion is higher than Whiting's for years two, three and four. It is possible Whiting's increased initial depletion is from a larger choke, but I believe it has more to do with proppant. The data comparison seems to prove production curve flattens at some point. The only question is when. Keep in mind the best cumulative oil producer of the two groups was drilled and completed by Whiting. Well number 17092 has produced 872636 barrels of oil since its IP test on 6/20/08.
The Whiting wells in Table 3 used 211 pounds of proppant/foot. EOG's Parshall wells used 420 pounds/foot. EOG is able to prop the fractures open wider and longer by using more. This seems to lengthen the time the EOG wells produced from the fractures before converting to exponential decline (matrix production). The lower production and decreased depletion in Whiting's wells at the 1440-day IP seem to indicate these wells are already in exponential decline.
|Well||1800-Day IP||Oil Produced||EUR|
At first glance the Whiting wells look better than EOG's. This is not the case when taking lateral length into consideration. The average lateral length of the Whiting wells are twice that of EOG's. In reality, the Whiting wells produced half the resource per foot. Well number 17092 is a great well, modelling to almost 2 million barrels of oil. These wells do not include natural gas or natural gas liquids in EURs, which accounts for an estimated 8% of production in Mountrail County.
In Table 5, I listed all of the Alger Field wells completed in 2008. I chose this field due to Brigham's success in the area and its close proximity. It is thought of by some to be as good if not better than the Sanish and Parshall Fields. The best result in table 5 was lower than all of EOG and Whiting's results. The reason is not geology, but well design. As these operators are now producing excellent results in these areas.
In summary, the Sanish and Parshall Fields are considered to be some of the best areas in the Bakken. Using wider chokes produces high 24-hour IP rates, but increases the depletion curve. Using more proppant increases production over the first few years of production significantly. It also flattens the depletion curve and leads to exponential decline at a later time. EOG was the top operator in 2007, but Whiting also produced very good results. When compared to other operators in the area, both EOG and Whiting outperformed. Looking at the second half of 2012, we are seeing a change in well design. More water depots are being constructed as agricultural water is converted to commercial uses. Proppant from Russia and China has increased pushing costs down about 40% year over year. As these costs decrease, more will be used. This should continue to improve well results.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The models used in this article are estimates. These wells could end up producing significantly less or more oil over the next few decades. This is not a buy recommendation.All of the wells in this article are measured in barrels of oil. Natural gas and natural gas liquids were not included in estimates. If you would like to see more of my articles, go to shaleinsight.net