Wednesday, September 26, 2007

Marathon Attempting The Double Frac, Dunn Co.

During a recent presentation, Marathon indicated (what I have suspected for some time) that they are planning to simultaneously fracture the laterals on the experimental two-well units that they recently received permission to establish. (see 7/16 post). This procedure, whereby both laterals are fraced at the same time to more effectively "bust up" the formation, especially in the area between the two laterals, reportedly has had some impressive success in the Barnett Shale in TX. In my opinion, this procedure has the potential to significantly transform this play, and may be the most useful technique in the Bakken since the advent of horizontal drilling itself. MOC is currently drilling on the Beck lease in Bailey Field in Dunn Co., where they presumably are going to utilize this procedure. Let's hope it's a smashing success (pun intended).

The company also had a few slides with general information that touted their efficiencies, and of interest, their determination that about two-thirds of their acreage appears to be drillable.

And a recent pic of their new office/shop complex just
north of Dickinson.

Monday, September 24, 2007

Whiting Putting The Feet To The Hole, Mountrail Co.

Last spring, Whiting O&G drilled a combined 21,214 ft. of hole in three laterals extending from a single vertical wellbore at its Perry State 11-25H in sec. 25, T.153, R.92, Mountrail Co. This should cast away any doubt that the company is doing its best to effectively drain this laydown 1280 acre unit. The well was completed for 1,081 bbls/day last May and has produced about 57K bbls up to and including July. In July, it produced about 14K bbls. The company last week spudded what is presumed to be another tri-lateral well about three miles to the east at the Liffrig 11-27H, sec 27, 153N, 91W. This activity is about six miles west of activity in Parshall Field.

Over at Parshall Field, EOG has completed the Zacker 1-24H, sec 24, 153N, 90W, in June for 870 bbls/day. During June and July the well produced a total of around 50K bbls.

Friday, September 14, 2007

Marathon Prevails At August Hearings. . . Sort Of

The NDIC has issued its order regarding the August hearing when Marathon and Hunt sparred over the creation of 1280 drilling units near Bailey Field in Dunn Co where Hunt held an interest in some of the units. In its Order the IC brought those lands within Bailey Field and created 1280 acre spacing units in all the units where Hunt had an interest and had requested 640 acre units.

However, in the one unit where Hunt held 50% interest in the 1280, the IC will not allow a drilling permit to be issued for that unit until March 31, 2008, to allow Hunt to test its techniques in the vicinity and determine if they are viable.

I'll let the exhibits speak for themselves. One comment about the Marathon depletion model exhibits though, as the results from simulation models are only as good as the inputs used in them. I would want to know how many times this model was run to get this result and how many variations of inputs where used in the process. In other words, was data based on reality used as inputs, or was the model run numerous times with a variety of different input values (not necessarily based on reality) until some possible predetermined result was achieved?

In any event, the one lateral put on the west side of the unit does not appear to be draining enough from the east side to justify the inclusion of those lands, in my opinion. These should be separate 640 acre units consisting of the east and west halves of the two sections. The eastern half should not be part of that unit, and if the lessees want to tie up the leases for 25 years on that east 640, they should have to drill on it.

Marathon's exhibits regarding 25 year depletion depicting the lateral: (1) in the center of the 1280; (2) 1320 ft. from the western unit boundary; (3) two laterals in the 1280; and (4) three laterals in the 1280. Without getting ridiculously technical on the pressure depletion aspects, let's just say that red is the original formation pressure and the darker the blue, the lower the formation pressure (indicating depletion).

Marathon also presented a number of exhibits depicting the expected production from each configuration and actual production for a number of wells, including those from Parshall Field, along with the economics for each well configuration scenario.

Hunt presented a number of exhibits trying to project the success in the Parshall area to the Bailey area by suggesting that the thickness of the middle Bakken was almost the same in both areas, and therefore, suggested that completion techniques were the driving force in the success at Parshall. As was pointed out, however, the formation thickness really has no significant relevance regarding the success of a well. The only relevant analysis as to whether a completion technique is controlling rather than lateral length or formation quality is initial production rates and the percentage increase in production that occurs after the frac job. If the production in Hunt's wells increases 100% and Marathon's increases only 50%, then that is some pretty good evidence that Hunt has a better completion technique.

Of interest, Hunt is calculating recoverable reserves of 350K bbls. on a single lateral in a 640 acre unit, whereas Marathon projects 333K bbls from two laterals on a 1280 acre unit (under their middle k.h analysis scenario -- k.h is essentially how easily fluids migrate to the well bore). Who is correct here???

The first exhibit shows Hunt's stage frac technique.

Wednesday, September 12, 2007

Another Major Player To Join Bakken Hunt In Dunn Co.

New player Newfield Expl. from Houston is planning at least two wells near Lost Bridge Field in northern Dunn Co. The company has requested that two drilling and/or spacing units be created in T.148, R.96, which is close to the southern extent of the Nesson Anticline, and north of the area currently being aggressively developed by Burlington and Continental Res. Hopefully, Newfield will be encouraged by the results from its initial wells in the play and drill many, many more.

UPDATE: Newfield had requested that its application for the September hearings be dismissed, but has reapplied for four 1280s at the October hearings, instead of the two stated above.

Dunn Co. remains the most active county in the play with twelve rigs making hole out of the 44 active rigs in the state. Williams and Mountrail Counties are tied in second place with eight rigs each.
Based on the current level of activity, it appears within the realm of possibility that the southern part of Mountrail Co, the northern half of Dunn Co., and the Nesson Anticline will be almost completely drilled out in the next few years, assuming that the economics remain favorable.

More Major Development Planned For Mountrail Co.

Both Murex and Whiting have disclosed big drilling plans spanning from Sanish Field to Stanley Field in central Mountrail Co. Last month Murex applied for seventeen 1280 drilling units south and west of Stanley Field and at this month's hearings, Whiting has a current application for over twenty 1280 acre drilling and/or spacing units in the vicinity of Sanish Field. All this activity encompasses the overall area of T.152-155, R.91-93, which, at its closest point, is about six miles west and northwest of EOG's main activity in Parshall Field.

Tuesday, September 4, 2007

September Showdown At The NDIC Corral On Tap

In what should be the most spirited hearing since, well, last month, Marathon is attempting to flex its muscle with Encore at the upcoming September hearing regarding the Murphy Creek field area in central Dunn Co. As indicated in my recent post about well density, Marathon had requested that this field's boundaries be expanded and asked that about eighteen 1280 acre spacing units be created. Marathon had previously received permission to create three 1280 acre drilling units in secs. 4 and 9 and 5 and 8, T144, R96 and secs. 27 and 34, T145, R. 96. The company has just finished drilling the well on secs. 5 and 8, and has just spudded the well on secs. 4 and 9.

Encore as predecessor to Kerr McGee had been developing the field on 640 acre units, and is currently drilling a 640 acre unit in sec. 1, T144, R96. After Marathon applied for the 1280s last month, Encore suddenly applied for and received about a half dozen drilling permits for 640 acre units. At the hearing last month, Marathon stated that they reached agreement with Encore that Encore would develop about half the requested sections on 640 acre units, and Marathon would drop those sections from its request.

Well, that agreement must not have suited someone, because Marathon is now requesting that most of the lands that it dropped from its original request last month in favor of Encore be once again be made into 1280 spacing units, or drilling units in the alternative. It should be noted that in a number of these proposed 1280s, Encore appears to have half interest in the unit. What should be the most contentious portion of this hearing is Marathon's separate and related request that most of the drilling permits Encore received (and has not yet drilled) be suspended and/or revoked. Like I said before, its time for the IC to issue some uniform guidelines as to this density issue, especially when it pertains to the same field, and where some development has already occurred on 640 acre units, which are legal units created with only the granting of a drilling permit.

In a related development, the activity in this area appears to be headed west as Tracker Res. has applied for a 1280 acre drilling unit a few miles to the west on the eastern edge of Little Knife Field in secs. 4 and 9, T144, R97. Tracker is currently drilling a rank wildcat about 20 miles to the east in secs. 1 and 12, T.144, R.94.

Map Legend:

red/orange: Marathon's new 1280 acre requested units
blue/light green: Marathon's 1280 acre units requested last month after dropping Encore's acreage
gray: Marathon's established 1280 acre drilling units
dark green: Tracker's new 1280 acre drilling unit request
yellow: mostly Encore's 640 acre units (in the center of the field area) already drilled