The Bakken and Three Forks plays hold close to $118 billion in remaining value and, unlike other key plays, every single Bakken sub-play generates positive returns, according to Wood Mackenzie's latest key play analysis.
“We expect Bakken/Three Forks oil production to average 1.1 million barrels a day (b/d) in 2014, growing to 1.7 million b/d in 2020,” said Jonathan Garrett, Americas upstream research analyst for Wood Mackenzie.
Garrett explained that, today, the Bakken produces more crude oil than any other unconventional play in the world and $15 billion will be spent on drilling and completion this year.
Wood Mackenzie analysis shows that operators will recover more than 20 billion barrels of oil reserves throughout the life of the play, and, contrary to recent concerns, infrastructure constraints are not expected to delay the play’s future development.
The key findings of Wood Mackenzie's analysis of 12 distinct sub-plays of both the Bakken and Three Forks plays are as follows:
Bakken players will spend more than $15 billion on drilling and completion in 2014, second only to the Eagle Ford in the Lower 48. Today, well costs continue to drop in the Bakken and efficiencies in drilling and completions are being realized as a result of pad drilling. Bakken and Three Forks wells now average $7-8 million per well, down from more than $10 million prior to 2011.
The highest initial production (IP) rates are seen on the Nesson Anticline, with 30-day IP rates averaging north of 1,000 boe/d, although estimated ultimate recoveries (EURs) are the highest in the Fort Berthold sub-play at nearly 700,000 barrels of oil equivalent. The Three Forks is actually the primary drilling target in the Southern Fringe sub-play and Three Forks wells have actually outperformed those in the Bakken in this sub-play and in the North Williston and Williams Perimeter sub-plays.
Continental remains the top operator in the Bakken, with over 1.2 million acres, the largest remaining reserves and the most advanced delineation program in the deeper Three Forks benches. However, some players with smaller acreage positions, like WPX, have more valuable positions on a per-acre basis. Some of the most valuable positions are concentrated in areas such as Fort Berthold.
Crude-by-rail now accounts for more than 73% of crude leaving the Williston Basin. Total rail capacity has hit 1.2 million b/d, compared to 783,000 b/d for pipelines and local refineries. Wood Mackenzie says that it does not believe that infrastructure constraints will impact the pace of the play’s development.