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Vol. 18, No. 32 Week of August 11, 2013
Providing coverage of Bakken oil and gas

Bakken Explorers 2013: Apache evaluates far western Bakken fringe

Kay Cashman

Petroleum News Bakken

Two companies lead the pack in western fringe exploration of the Williston Basin’s Bakken petroleum system — Marathon Oil and TAQA North USA, which have been drilling wells in the eastern half of Sheridan County, west of North Dakota’s Divide County (see story on page 12). Even farther west, in Daniels County, Mont., the lead explorer, and the only E&P company of any size in the area, is Apache Corp., doing business as Apache Western Exploration.

The big independent announced it had picked up 300,000 net acres in Daniels County in June 2012, subsequently drilling five wells and then pulling its people and equipment out of the area in January 2013.

The main newspaper in the county, the Daniels County Leader, reported Jan. 31, “Apache employees have said that it will be six months or so before they return. We were told, ‘This is a science project and remember there have been other successful oil fields developed over a period of years, not months.’”

An Apache spokesman told Petroleum News Bakken in mid-July 2013 that the company was still evaluating data.

Ahead of the pack

When Apache first announced its entry into Daniels County, its executives said the newly acquired acreage held 35 vertical wells, all of which were “oil saturated.”

Houston-based Apache acquired its Montana assets from Shale Exploration LLC, a PR savvy firm headquartered in Fort Worth, Texas, with three other U.S. offices, including Scobey, Mont., the county seat of Daniels.

Dubbed the Jayhawk prospect by Shale Exploration, it was hard to determine which partner (Shale Exploration retained 100,000 acres of the 400,000-acre prospect) was more upbeat about the potential of the acreage, which they estimated had “more than 1,900 potential” drilling locations with a “potential resource of 1 billion barrels of oil.”

Apache, never a company to dally when there’s drilling to be done and money to be made, planned to drill “up to five wells” in 2012.

“That program will run through the end of the year, and assuming success, we’ll continue on into 2013,” company vice president for exploration and new ventures, John Bedingfield, said June 15 at Apache’s 2012 Investor Day.

The announcement was the first time Apache officials talked about Daniels County publicly, giving the company what Bedingfield referred to as a “first-mover” advantage, with “low entry costs.”

Pointing to the Elm Coulee field on a map (“Williston Basin Oil, Lead Position in Daniels County, Montana”), Bedingfield told investors, Elm Coulee’s “got a billion barrels of oil from the Bakken. … There’s no Three Forks at that location. The red dots … represent where industry is currently drilling, and what you can see is that industry is moving in this direction and certainly … has been quite active in Canada, as well.”

But Petroleum News Bakken could only locate one of the 30 or so rigs purportedly drilling in Sheridan County, directly to the east of Daniels; only three of the 30 or so rigs in Roosevelt County to the south and east of Daniels; and one in the unnamed Valley County to the west where Apache’s map showed four. According to Oil Patch Hotline’s June 14, 2012 Montana rig report those were the only oil and gas rigs working in the area at the time.

When asked about the discrepancy Apache spokesman Bill Mintz said July 24, as this magazine was going to press, that “IHS data shows 76 wells spud in those three counties in the first half of 2012.”

One of the things Bedingfield was very pleased with was that he expected the wells to be less expensive — $7.5 million versus about $10 million in the heart of the Bakken in western North Dakota — because the Bakken petroleum system was at a shallower depth in Daniels County than farther east.

Although Apache was initially focusing on the middle Bakken and the upper Three Forks zones, Bedingfield said “there are a number of other plays throughout … the Madison section above us, Lodgepole and others. … And below in the Devonian, there’s other Devonian plays, the Birdbear, for example, which also has oil pay.”

One drilling pad, he says, should be able to access four square miles with 16 wells — “eight Bakken and eight Three Forks wells, at basically 10,000 foot laterals.”

In a slide that looked at a cross section of Apache acreage, the reservoirs were “fully matured and definitely in the oil window, with the lighter colors representing higher oil saturation. The two grey bands or the grey band at the top and the one sort of in the upper middle represents the two Bakken shales. They are mature in this area. We put a lot of time and effort into (determining) that. … We have great saturations in our reservoirs. And the reservoirs here, they’re a little bit siltier. It actually has slightly better porosities than we’ve seen elsewhere and the facies are, I think quite amenable to very good production rates,” Bedingfield said.

“So we do think this is a great location. It’s very similar to the Rough Rider field, I believe, on the eastern side, and also a little bit to Elm Coulee to the south, although our pay … in this part of play is significantly larger than at Elm Coulee.”

Pleased with first well

In early November 2012, Apache Chairman and Chief Executive Officer G. Steven Farris said he was pleased with what he had seen from the first well drilled in the company’s Daniels County acreage.

“As we continue to build and execute our global pipeline of exploration activity we’re testing two wells (in two new plays for Apache) — one in the Williston Basin and one in the Mississippi Lime. The good news is we’ve had good oil shows from the logs in the formations that we were targeting,” he said.

“We’re currently in the completion phase of our initial wells in each of these plays and we’ll be experimenting with our frack designs to give us optional results,” Farris said, noting that in Daniels County “there have been some other operators … not right next door … that have announced pretty good results. I mean, the play is moving that way (northwest), so hopefully, it moves all our way. We’re going to find out here.”

As this annual edition of The Bakken Explorers magazine goes to press Apache is preparing for its second quarter conference call on Aug. 1, where an announcement about its Montana well results is possible, as it will be six months since Apache employees told Daniels County residents they would return in six months.



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