While the world has gone through one of its worst oil price slumps ever, U.S. oil and natural gas producers that have been able to withstand the shock are in a stronger global position, and the prospect for longer-term growth in the Williston and Permian basins has never been better, speakers said Thursday at the last day of the Williston Basin Petroleum Conference (WBPC) in Bismarck, ND.

Senior executives from Hess Corp. and WPX Energy Corp. outlined efficiency improvements and prospects in both parts of the Bakken and Delaware Basin sub-basin of the Permian, while a Houston-based energy market research specialist outlined how U.S. producers are looking good for when oil prices turn upward and stay above $60/bbl.

Even though Bakken prices sit generally $10/bbl lower than average U.S. crude prices, on a global basis they are positioned at "potentially the nexus of the entire global oil market," said John Gerdes, managing director and head of research at KLR Group in Houston. "What that simply means is that these resources need to be responsibly produced because even though they are higher cost in the United States, they sit as the proxy for global marginal oil costs."

Gerdes said this illustrates how the global price slump has kicked off a wave of efficiency improvements in the U.S. production sector that has driven down costs on the scale of 20%. He predicted that drilling will come back in the Bakken, but not to the all-time high levels of more than 200 rigs but up to the levels of early last year.

In outlining a continuing series of efficiency gains, Hess' Gerbert Schoonman, vice president for Bakken assets, declared that the "Bakken will only get bigger and better." He said the play is 100 miles long and 150 miles wide, so the challenge is to keep making technological advances and efficiency gains in all of Hess' 1,200 wells and for the 3,000 other drilling locations it holds in the basin.

Schoonman said Hess has standardized all of its equipment throughout the Bakken and used new technology wherever it makes sense to improve efficiencies.

Hess has adopted the “Lean System” from the manufacturing sector and applied it to oilfield operations, driving down well completion times from 45 to 16 days on average and the cost of new wells from $34 million to $5.1 million per well, Schoonman said. Lean is a low-cost, high-productivity system, he said, adding that it has also helped Hess in its well spacing.

Another major player in the Bakken that is emerging as the same in part of the Permian Basin, WPX Energy in recent years switched from a gas to an oil emphasis in its portfolio, which also includes the San Juan Basin, according to Rick Moncrief, WPX CEO. He compared the unique aspects of the Bakken and Permian plays.

Owning the distinction of drilling the first horizontal well in the Bakken as a young drilling engineer in 1987, Moncrief said that historic move in North Dakota occurred when oil was at $9/bbl, so he is not surprised by all the advancements of the past two years in the midst of the commodity price crash. WPX still holds 88,000 acres in the Bakken and around 600 wells still to be drilled.

Last year, WPX moved into the Permian with a $2.75 billion purchase of RKI Exploration & Production LLC’s operations (see Shale Daily,July 14, 2015), concentrated on the Delaware Basin in the western portion of the Permian. As a result, it now has 94,000 net acres and 3,500-4,000 drilling opportunities.

"You're going to be hearing a lot more about the Permian in future years," said Moncrief, who compared the Delaware portion as akin to where the Bakken was six years ago in its development, calling it "still immature."

"The Delaware is thick, about 25,000 feet, a tremendous potential; we have a world-class portion of the Delaware," Moncrief said.

In the Williston, WPX has invested about $2 billion so far and it has at least 575 new drilling locations, Moncrief said. It is operating only one rig now in the Bakken and has 19 drilled but uncompleted (DUC) wells. "More than likely we'll start completing those DUCs later this year," he said.

In a straight comparison of WPX assets in the Bakken and Permian -- both of which he is bullish on -- the Permian pencils out as the strongest, Moncrief said. It is the nearness to market in the Permian, compared to the more "remote" Bakken supplies that makes the difference, he said.

Gathering/transportation costs in the Bakken run about $8/bbl, while those same costs average $3.50/bbl in the Permian, Moncrief said. Taxes are 10% and 8% in the Bakken and Permian, respectively. While some of the Bakken play lies on federal lands, none of the WPX Permian acreage does. Average costs for a well are comparable: $5.5 million/well in the Bakken and $5 million in the Permian, he said.

"We like where we are in the Bakken and we would love to have more acreage there, we're going to continue to be active here in the Williston; our biggest challenge now is getting ready to get back to work."