ExxonMobil Corp.’s production in the Bakken Shale has reached about 32,000 boe/d, which is 60% higher than a year ago and double the amount the company was producing just three years ago, a top executive said Thursday. Two more oil-directed rigs have been added to the play in just the past three months.
“We have moved into a development phase across our roughly 400,000 net acre leasehold,” said David Rosenthal, vice president of investor relations. He spoke with financial analysts about the company’s performance in 2Q2012 and said the Bakken Shale continues to be a standout. “In the first half of 2012 we turned 40 wells to sales, nearly double the pace of 2011.”
ExxonMobil had eight operated rigs running at the end of April in the Bakken; the rig count now is up to 10 (see Shale Daily, April 27). Another 10 rigs are being used in the Woodford Shale in the Ardmore Basin, where ExxonMobil continues to add to its position and its development plans.
“We completed a strategic bolt-on acquisition adding 58,000 acres of leasehold and just over 4,000 boe/d of production,” said Rosenthal. “This brings our total Woodford Ardmore acreage to approximately 260,000 net acres and expands our resource potential beyond the 600 million boe previously estimated. In the second quarter, we utilized 10 rigs to delineate our acreage, to evaluate optimal well spacing and continue development activity.”
The producer has been dropping onshore rigs across the United States in reaction to low natural gas prices. ExxonMobil is the largest gas producer in North America. A year ago the producer had about 70 rigs running, but today it’s running 51 rigs, said Rosenthal.
“What you’re seeing us doing is really more reflective of our longer-term approach to this,” he said. “We are still drilling in dry gas areas. We do continue to drill wells in order to work on our delineation, and our evaluation of those plays to make sure that again over the long-term, we want to be in a position to maximize the recovery and maximize the value generation from those resources, so that hasn’t changed.
“What you have seen that we’ve talked about is both a reduction in the total rig count, and some of that of course is in response to the short-term pricing that’s happened. In addition, the move of a lot of the rigs over [to] liquids and liquids-rich [areas] is really both to start to delineate and appraise and think about developing our new acreage like the Woodford Ardmore, again as well as wrapping up in the Bakken.”
ExxonMobil doesn’t “have a price trigger to any big extent” in deciding where to drill, Rosenthal said. “You might do something a little different at the margin in any given quarter depending on prices. but when you really look at the overall plan and the overall strategy, it continues to be with a very long-term view of this, very large, very high-quality source we got.”
Natural gas liquids (NGL) accounted for about 6% of ExxonMobil’s U.S. production in 2Q2012. Rosenthal was asked how much more the company planned to expand in that segment.
“That’s a question I really couldn’t answer because I have no idea what the forward projections are going to look like,” he said. “Obviously, there’s a lot of activity, a lot of plays, [and] we are certainly heavily involved in both…in the ramp-up of our existing fields like we have at the Bakken, but also in the pursuit and capture of a number of attractive acreage holdings like we mentioned in the Woodford Ardmore and the Utica.
“So from an ExxonMobil perspective, I can tell you as we move out of these delineation appraisal and valuation of programs into full development, you’ll continue to see the ramp-up that I mentioned in my prepared remarks, particularly in places like the Bakken and then in some of the other areas. But we don’t have a target and I couldn’t give you a target for the industry.”
Rosenthal said, “It’s really just going to depend on how quickly these new opportunities that us and others are finding. You can get in and get those online and then of course you need the midstream infrastructure to evacuate those volumes and get them to market and to the extent that you’re producing NGLs, there is other midstream infrastructure that has to be put into process.”
There’s “a lot of opportunity, a lot of nice ramp-up kind of across the board…But it would certainly be hard for me to give any indication of what kind of ultimate target might be either for us or the industry in general.”
Onshore development in emerging unconventional plays overseas also are progressing, he said.
Last month ExxonMobil ended an unconventional exploration program in Poland after two wells failed to yield a commercial flow of hydrocarbons (see Shale Daily, June 19). However, “I wouldn’t draw any conclusions in any one country or across Europe,” Rosenthal told analysts.
“As you look across Europe, there are a number of other opportunities and a number of other countries that people are looking at including ourselves. And so I wouldn’t draw any conclusions in any one country or across Europe; it’s early days. We have set off and as you look around the world at all the unconventional resource opportunities, they’re all different; they’re all in the early stages of evaluation. And it’s going to take some time to figure that up.”
Rosenthal said there’s been little talk about ExxonMobil’s holdings in Germany, where the company has a “very large acreage position…We continue to want to actively explore that. We’ve had some permitting issues there over the last year or so that has held that program up.”
However, a recent study by German experts found that unconventional drilling and development would not lead to “fundamental, environmental or other risk aspects that would argue against the exploration and production of natural gas from unconventional reservoirs. So with that study out, we are in the process now of working with the regulators, particularly in the local areas and the community at large to progress our exploration plants and get the permits necessary to progress.
“So again, I think every country is different, every unconventional resource opportunity is different and it would be tough to make any geographic conclusions at this time.”
ExxonMobil also continues to explore the potential for liquefied natural gas (LNG) exports from North America because of the huge amount of onshore gas supplies, said Rosenthal. “We are continuing to study those options both in the U.S. and in Canada, as you know, we have vast unconventional holdings in both of those locations. We have a lot of optionality, a lot of flexibility; we do have some assets in the ground already to import LNG. So we are continuing to study all that and look at our options and the economics and more on that as time goes on.”
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 2158-8023 |