NOW READ OUR ARTICLES IN 40 DIFFERENT LANGUAGES.

SEARCH our ARCHIVE of over 14,000 articles
Vol. 17, No. 52 Week of December 23, 2012
Providing coverage of Bakken oil and gas

Seeking full production

Kodiak launching 2 pilot projects to test Bakken-Three Forks on tight well spacing

Ray Tyson

Petroleum News Bakken

Kodiak Oil and Gas Corp. is embarking on two pilot projects to test the full potential of the Bakken and underlying Three Forks reservoirs using much tighter well spacing than usual at its Polar and Smokey prospects in North Dakota. The effort will consume about a third of the company’s entire 2013 drilling budget.

Kodiak chief executive Lynn A. Peterson also told analysts at a recent conference that because of drilling efficiencies the company will be able to complete as many wells in 2013 as it will this year, using just six rigs, two fewer than earlier this year.

Peterson also said that while merger and acquisition activity continues in the Bakken, fewer large parcels are available these days, confirming what other regional players are saying.

Moving three rigs to Polar

Kodiak plans to move thee rigs onto its Polar block in Williams County in January, where a dozen wells are to be drilled and completed within a single 1,280-acre spacing unit. All of them will be fracked and then brought on line about the same. About half the wells be completed in the middle Bakken and half alternated between what Kodiak refers to as the upper and middle benches of the Three Forks.

“We’ve got to be prepared to handle 15,000-to 20,000 barrels in a pretty short timeframe in order to move all this properly,” Peterson said at the Dec. 5 Wells Fargo Securities Energy, MLP and Pipeline conference in New York. “This is going to be a fun test for us. We think it will really start to show us what this play’s potential is.”

12-well test at Smokey

Kodiak will run a similar 12-well test with the same tight well spacing on a 1,280-acre unit on its Smokey prospect south of Polar in McKenzie County, except that these wells will not be brought on stream at the same time. In fact, two wells already have been fracked. Three more are currently being drilled. Two more rigs then will be brought in to drill the remaining seven wells.

“So we’re going to see if there is a difference in production as we frack them over time versus fracking them all together,” Peterson said. “So there’s a little bit of science going into this thing, in trying to figure out what we’ve got here.”

He added: “It is important that we do this work in the early stages of our development program in order to gain information to help us best drain the reservoirs.”

No third bench test

However, Kodiak said it will not test the deeper lower bench of the Three Forks, or what Three Forks pioneer Continental Resources refers to as the third bench, even though Kodiak believes its Polar, Smokey and Koala prospects have lower bench potential. Continental recently completed the first-ever horizontal well in the third bench, which has now been successfully producing for several weeks. (See story on page 3 of this issue.)

“We want to see what the results are before we go spending any capital,” Peterson said of the third bench. “But we’re very comfortable with the first two benches.”

Continental’s 14-well pilot

Continental is conducting a 14-well pilot on its Charlotte prospect, also located in the heart of the Bakken play and relatively close to Kodiak’s Polar and Koala blocks. The 1,280-acre Charlotte unit is the first unit in the Bakken to have wells producing from three separate horizons — the middle Bakken and the second and third benches of the Three Forks.

Additional drilling successes could lead Continental to dramatically increase estimated recoverable oil that possibly could be applied to the entire Bakken-Three Forks play.

“We will continue to monitor other operators’ results from tighter drilling, as well as results from wells drilled in the deeper benches of the Three Forks formation,” Peterson said. “Both of these developments could have a significant impact on the entire Williston Basin.”

Efficiencies drop well costs

Meanwhile, Kodiak’s well costs in the deepest, most operationally expensive portion of the Bakken have dropped to $10-$10.5 million from $11.5-$12 million per well, the company said.

That’s because Kodiak is drilling wells much faster than a year ago due to efficiencies built into the system, Peterson said, noting that a well that used to take 35-38 days to drill now takes 20-23 days, with some wells taking less than 20 days to drill. For example, crew quality has improved and more wells are being drilled and completed per pad, Peterson said.

“We’ve had the same drilling supervisors, a lot of the same service companies now that have worked with us,” he explained. “We’ve also had a chance to really work through some of the details now, changed out some mud, changed out some bits. It used to take us two or three days to make the bends. Today we make it in about 15 hours. Those types of things have changed a lot. So it’s a combination of everything.”

Few big parcels available

Like every major play, consolidation continues in the Bakken, “though a lot of good packages have been purchased already,” Peterson said, explaining that ExxonMobil, Hess, Statoil and other large companies have contributed to the land scarcity, as they expand their positions in the Bakken.

“Are we going to find a 50,000-acre block in the heart of the play? No! But I think we might find a 5,000 or 10,000-acre block to build on our position. But it’s certainly changed in the last year,” Peterson said.



|
Click here to subscribe to Petroleum News for as low as $89 per year.
Petroleum News Bakken - Phone: 1-907 522-9469
[email protected] --- https://www.petroleumnewsbakken.com

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News Bakken)Š2013 All rights reserved. The content of this article and website may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.