y Creek Field, Encore and Marathon have reached some sort of agreement whereby Encore is going to develop an number of sections on 640 acre spacing and Marathon will develop its portion of the field on 1280 spacing. It appears that the time may have to come pretty soon for the state to set some sort of uniform spacing for these Bakken wells instead of leaving it up to the individual companies, which often leads to a hodge-podge of different sized units in the same field. Some companies like Marathon are beginning to place their lateral to one side of the unit which would allow another lateral on the other side of the unit, in the event a second lateral will be economic to drill. Meanwhile, other companies are drilling a lateral through the center of a 640 or 1280 acre unit, which does not allow for infill drilling within that unit. Me thinks its time for some uniform spacing rules.
Then there is this puzzle with the apparent shortage of drilling rigs, why the two rigs that Ansbro had been utilizing in its drilling program (both Nabors rigs, I believe) have been stacked out in Willmen Field since May or June. It appears that Ansbro has temporarily suspended or permanently canceled its drilling program, but that doesn't explain why these rigs aren't being used by another company. If anybody out there knows, let me know. Some rumors are going around that Ansbro and Continental may be joining forces in some manner regarding the development of the hundreds of thousands of acres that Ansbro has under lease primarily in southwestern Dunn Co. In certain areas, Continental is actively leasing whatever acreage Ansbro for whatever reason didn't get.
4 comments:
Another hearing of great interest this week was Case #9633. Marathon and Hunt battled it out on 1280 vs 640 and which unit is better to optimize different completion methods. Listen to the audio when it is made available. Several operators want to try EOG's completion method in other areas. The play is still young and companies need to still experiment to find the optimal production completion method. Once that happens, industry will conform to the same standard.
I actually dout that that everyone will conform. Show me the uniformity in Richland county and I might believe you. Otherwise it's going to be 1280s to cover large tracks of leases and 640s or less to actually produce. There should be some kind of control over the spacing of these wells.
That is very true about Richland County. But what is different about Richland County is that the percentage of economic wells is much higher and completion methods work very well for both 640s and 1280s. In ND, outside of a few companies and a few sweet spots many of the wells are still uneconomic. Even some of those first thought to be economic have had decline rates extending payouts far too long. Since Ansbro was mentioned, look at their wells. A couple of their first wells are their best wells, and even none of those have reached payout yet. They have tried 640s and 1280s with different configurations. Instead of seeing improvements their recent wells continue to be marginally economic, at best. They need to find better sustained production rates or they too will curtail drilling schedules or give up entirely.
The key in ND seems to be the stimulation method. If EOG’s method can double, or more, IPs and recoverable reserves and it will only work with a single lateral of about 4500 feet, then in areas that are uneconomic the economics will force other operators to do similarly. If their method, or possibly some other even better key is found, works in either 640s or 1280s, then we will continue to see a mixture unless uniform spacing is established. The companies that are trying to hold lease acreage with 1280s also generally believe they will have to drill a 2nd or 3rd well to efficiently drain that large area. However, if their well configurations do not work with the best stimulation method they will find out that the barrels just do not add up and will be forced to give up that idea.
Ultimately, the best science in the play will answer the question.
Excellent comments. I had planned to address the spacing issue in a separate post (which I just did), but couldn't help myself and bring it up here too.
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