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2014 North Dakota Oil and Gas Activity Robust, State Official Predicts

The year-end lull that comes with the onset of winter is likely to give way next year in North Dakota to a million-barrel-a-day oil and natural gas industry that will see a number of positive changes, including decreases in production costs and amounts of flared associated gas, along with continuing technology advances in drilling operations, the state's chief oil/gas official said Friday.

Acknowledging that growth has slowed of late because of weather and other reasons, Lynn Helms, director of the Department of Mineral Resources (DMR), said oilfield operations should get on track to hit the 1 million b/d of oil production mark in the first months of 2014. Helms sees the industry being primed to ramp up growth.

During a webinar announcing the state’s latest production statistics, Helms said operators are looking at making changes in their hydraulic fracturing (fracking) mix and some also are considering moving to water flooding and/or carbon dioxide (CO2) injection to increase productivity in a number of existing wells.

Operators are significantly increasing the amounts of sand and ceramic proppant used in fracking operations, as well as testing CO2 use in the extraction process, Helms said.

"Rather than increase the water volumes, they are increasing the sand volume by 25% to 50%," he said. "And they are seeing good results out of that. They are seeing better results on some wells just by increasing the amounts of sand used."

Helms said he expects a report before the end of the year on some water flooding tests, and a January kick off for CO2 injection testing. "Both of these steps [sand and water/CO2 injection] have enormous long-term prospects,” he said.

There is also an expectation that the trend to multi-well drilling pads will continue next year, said Helms, noting that this year two of every three wells were located on multi-well pads. "This is a huge shift in the way the industry has operated," he said. “Before that it was hardly done; now it is unusual if it isn't done."

Helms indicated that he thinks the amount of gas flaring will begin to come down markedly next year with the addition of the Hess Corp. Tioga gas processing plant (see Daily GPI, Oct. 29) and other infrastructure additions. He said an industry task force looking at options for addressing flaring will make its report to the state Industrial Commission this week.

"We're expecting a big impact [on flaring], although it is a little hard to quantify," said Helms, noting that the Hess plant is connected to an enhanced gathering system that allows gas to go to Northern Border Pipeline or into a 12-inch diameter, 126 MMcf/d rich natural gas pipeline that Alliance Pipeline Ltd. recently opened

The new plant helps service two of "the hot spots for flaring," he said. The Tioga plant and related gathering system should result in a 5% drop in flaring, taking the state's current totals from 28% to 23%. With the addition of other new gathering capacity in Divide County, Helms said flaring could be reduced by another 5%.

Advances in the overall drilling exploration/development process have resulted in about a 25% reduction in average well costs during 2013, Helms said. "The building out of the natural gas gathering and being able to add those revenues [for marketable supplies] to the oil revenues has been significant," Helms said.

"The typical well at the end of last year was costing about $11 million, and that's now down to between $8.5 and $9 million." The savings for 2013 will be turned into increased E&P and production next year, Helms said.

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