North Dakota Oil Spill Recovery Efforts Underway - Tesoro

Bakken Pipeline Map

North Dakota oil spill recovery efforts are underway near Tioga in Williams County and it will likely be weeks before we know the full story.

The spill affected a little more than 7 acres and did not penetrate groundwater sources or impact wildlife.

Many have criticized the state for taking 11 days to notify the public. One reason for the delay was officials thought the spill was less than 1,000 bbls.

Tesoro now estimates more than 20,000 bbls of oil were spilled from the pipeline. Some are questioning those estimates, but again it's early and very difficult to estimate the true impact.

"As unfortunate as it is, it is actually very beneficial with a clay layer and not hitting water," one Tesoro official stated.

Tesoro and locals are actually lucky as there is thick clay layer approximately 10-12 feet deep that helped contain the oil. The seal has allowed Tesoro to recover more than 3,000 bbls already. Trenches have been dug to allow the oil to flow out of the soil. Those trenches will likely be used like french drains throughout the winter, while remediation efforts continue.

The section of pipe that was leaking has been sent to an independent lab to be studied and a replacement pipe circumventing the spill site is already being installed.

Watch for an official announcement from Tesoro as the cause and impact of the spill can be more confidently determined.

Harold Hamm Says the Bakken Shale Could Produce 2 Million b/d

Harold Hamm Continental Resources

Harold Hamm followed reports from the NDIC that production had surpassed 900,000 b/d with a prediction that the Bakken will ultimately produce 2 million b/d.

Read more: North Dakota Reports Record Production Volumes in August 2013

His company, Continental Resources, controls over 1 million acres and produces approximately 80,000 boe/d from the Bakken.

A few other notable comments included:

• We're 75% of the way to fully optimizing the Bakken
• He believes our borders should be opened to oil exports
• He doesn't expect an oil price crash. Oil is simply harder to find and produce than natural gas
• Oil prices will remain in the $90-100 bbl range
• The chances Keystone XL will be built are dwindling

Mr. Hamm was speaking at the Bloomberg Oil & Gas Conference held October 17, 2013 in Houston.

North Dakota Reports Record Production Volumes in August 2013

Bakken Production Chart - Goldman Sachs

North Dakota oil production increased 4% from a little more than 875,000 b/d in July to more than 911,000 b/d in August. Natural gas production rose ~3% and eclipsed 1 Bcf/d for the first time.

That means North Dakota accounts for more than 15% of all the oil produced and 1.5% of all the natural gas produced in the onshore U.S.

Largest Monthly Bakken Production Increase Ever in July

Bakken production increased by more than 4% or ~35,000 b/d in in August to reach 847,000 b/d. That represents significant growth over volumes of ~638,000 b/d in August 2012 and ~379,000 b/d in August of 2011.

Other notes from the August monthly NDIC Director's Cut include:

• 287 wells were permitted
• 9,452 wells producing
• Average crude oil price of ~$93/bbl in August
• Completions fell from 251 in July to 130 in August
• Time from spud to total depth averaged 22 days
• Time from spud to first completion rose from 79 to 105 days
• About 450 wells are waiting to be completed

August completion levels falling should not be alarming. July completion figures were inflated by bad weather and other completion delays in prior months.

Read the full director's cut at dmr.nd.gov

Oasis Petroleum Is Testing Bakken & Three Forks Well Spacing

Bakken & Three Forks Well Spacing Tests

Oasis Petroleum believes the company can drill four Middle Bakken and four Three Forks wells on each 1,280-acre unit, but the future might be more dense drilling than they currently suggest.

Oasis is testing up to seven wells per formation in the Bakken and the first bench of the Three Forks (TFS 1).

The company also notes that other operators are testing as many as eight wells per formation in the Middle Bakken and Three Forks 1st, 2nd, and 3rd benches.

Watch for results over the next few months to determine how many wells can be drilled in the Bakken and the Three Forks' first bench. It will probably be late next year before we know how many wells can be drilled targeting the lower Three Forks intervals.

Oasis and Continetnal Resources have the most downspacing pilots being tested, but we'll see results from Kodiak and Whiting as well.

Slawson Planning Dual Laterals in the Upper Bakken

USGS Bakken Reserves - Petroleum System Map

Slawson Exploration has received approval to drill dual laterals targeting the Upper Bakken Shale member across several parts of North Dakota.

The company applied for field amendments allow for the drilling of multi-lateral horizontal wells in parts of McKenzie, Mountrail, and Williams counties.

The applications also gain approval for a portion of the vertical section of the wells to open into the Lodgepole formation. The opening will be used to kick off into the second lateral.

Early horizontal development in the Bakken was dominated by multi-laterals in Montana, but technical complexity has led to the use of single laterals across the state line. It will be interesting to see if Slawson determines multi-laterals are the best way to develop Bakken acreage in parts of North Dakota.

Read the full NDIC docket from August at dmr.nd.gov