'Subtle' fracksStatoil maintains slower Bakken growth as part of long-term strategy Mike Ellerd Petroleum News Bakken
Despite routinely coming in with chart-topping 24-hour initial production rates in North Dakota, Statoil's Bakken production is holding steady as the Norwegian state-owned multinational continues to focus on sustainable long-term in the Williston Basin.
While many Bakken operators have and are seeing double digit month-over-month production increases, in the third quarter Statoil’s Bakken production averaged 46,800 barrels of oil per day, an increase of just under 4 percent from the 45,100 bpd average in the second quarter, and the second quarter production was an 8 percent increase over the first quarter average production of 41,900 bpd. That slower growth, however, is part of Statoil’s Bakken strategy.
When asked during an Oct. 30 third quarter conference call about Statoil's slower production growth in the Williston Basin compared to many of its competitors, Statoil Chief Financial Officer Torgrim Reitan said his company views long-term production from a reservoir as more important than maximizing short-term production. He said boosting initial production to high rates in the Bakken is easy, but that, he said, can be followed by rapid decline.
“It will be the easiest thing to boost short-term production in (the) Bakken. It is just to frack very hard and then you’ll see the initial production go very, very high and then decline very rapidly,” Reitan said. “The key here is to frack as subtle as you can, reduce the distances between the fracks and get the maximum out of your reservoir. Then you get the higher recovery rate but a much flatter production profile and much less initial production.”
Statoil has also cut its rig count by two-thirds throughout the first three quarters of 2013. Between the first and second quarters, Statoil reduced its rig count from 15 to 10, and between the second and third quarters it again cut the rig count by five and is now running just five rigs, all part of the company’s long-term strategy.
“For us it’s very important to take a long-term perspective on that asset,” Reitan said. He added that with the smaller number of rigs, Statoil is able to take what it learns from one drilling operation and apply it across the full Bakken rig portfolio.
North American output Statoil's overall North American production averaged 240,700 barrels of oil equivalent per day in the third quarter, of which the company’s production from the Bakken petroleum system accounted for just over 20 percent at 49,400 boepd. Of that 49,400 boepd Bakken production, liquids accounted for 46,800 boepd and gas made up the other 2,600 boepd for a nearly 95 percent liquids output, the highest of all of Statoil’s eight liquids producing North American fields.
In terms of barrels of oil equivalent, the Marcellus was Statoil's largest North American producer averaging 108,400 boepd in the third quarter, but that production was 93 percent gas. The Bakken was the company’s second largest producing field in North America, with the Eagle Ford coming in third at 32,100 boepd which was 62 percent oil.
North Dakota output Even though Statoil does not focus on maximizing short-term production, over the last year it has regularly had wells going on production with the highest 24-hour initial production, IP, rates in North Dakota. For example, new Statoil wells were among the top IP wells for every week except for the 17 weeks between July 8 and Nov. 4, and the company’s wells topped the IP chart in 12 of those 17 weeks with IPs ranging from 2,811 to 5,417 barrels per day and averaging 3,822 bpd.
Furthermore, three of the weekly high IPs were record high North Dakota IPs. The latest record was the 5,417 bpd produced from Statoil’s Beaux 18-19 7H well in the Banks field in north-central McKenzie County. The other two record setting IP wells, the Beaux 18-19 4H and 6H, are also in the Banks field (see map). Two of the Beaux wells are on the same pad at the bottom of a standup 1,280-acre spacing unit and run north, and the other is on the adjacent spacing to the north with the well running south parallel with the other two wells. All three are middle Bakken formation wells.
The other chart-topping IP wells dating back to July 8 are in the Alger field in southwest Mountrail County, the Avoca field in southwest Williams County, the Stony Creek field which borders the Avoca field to the north, and the Poe field with borders the Banks field in northern McKenzie County.
In August, the last month for which total preliminary production data were available from the North Dakota Department of Minerals Management Oil and Gas Division, Statoil ranked as the fourth largest oil producer in North Dakota averaging 50,921.87 barrels of oil per day from operated, non-confidential wells.
Global production Statoil reports its production in terms of “equity” volumes, which represent the volume corresponding to the percentage that Statoil owns in a given field under production sharing agreements and does not represent total volume produced.
On a global scale, Statoil's international, i.e., non-Norwegian, equity production, which includes North America, averaged 728,000 boepd, which was 73 percent liquids. The company's Norwegian equity production averaged 1.124 million boepd, which was 52 percent liquids. Combined, Statoil’s third quarter production averaged 1.852 million boepd and was 60 percent liquids.
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