In September, QEP Energy Co. submitted a petition with the North Dakota Industrial Commission asking for creation of an operating unit consisting of all of the Grail field and a portion of the Blue Buttes field in east-central McKenzie County with QEP as the sole operator of the unit.
Under unitization, the entire area within the unit boundaries would be developed as a single spacing unit, and one of the advantages is that the commission would be able to eliminate setbacks.
According to QEP, eliminating setbacks is essential for full development of the reservoir in the unit. The company estimates there are approximately 415 million barrels of oil equivalent within the proposed unit boundaries and that approximately 130 million of those barrels, some 31 percent, are recoverable under the current spacing and setback rules. However, if unitized, QEP believes an additional 5 million boe could be recovered, bringing the total reservoir recovery within the unit to 33 percent.
The unit would consist of all of the approximately 33 sections currently in the Grail field along with six sections in the eastern region of the Blue Buttes field for a total of approximately 39 sections. QEP puts the total acreage of the unit at 24,946.56.
While QEP currently operates most of the wells in the Grail field and a number of wells in the southern portion of the Blue Buttes field, under unit designation, QEP would be the only operator in the unit. According to Department of Mineral Resources Oil and Gas Division records, QEP operates all oil and gas wells in the Grail field except for one that Enerplus Resources USA operates. There are multiple operators of wells in the six sections of the Blue Buttes field that will be included in the Grail unit.
Oil and Gas Division records indicate that in the Grail field, QEP currently has 28 wells on active status, 33 on confidential status, 17 designated as being drilled and 14 designated as permitted.
Bakken pool unit
QEP’s target formation for the unit is the middle Bakken. In its application, QEP is asking that the pool for the unit be defined as a Bakken formation unit as defined by QEP’s Linseth 4-8H well in the western area of the Grail field.
For the Grail field, QEP defines the Bakken pool as the interval running from approximately 50 feet above the upper Bakken shale to approximately 50 feet below the top of the Three Forks formation.
The log for the Linseth 4-8H well puts the top of the Bakken formation at a depth of 10,734.9 feet and the bottom at 10,924.5 feet, for a resulting pool thickness of approximately190 feet.
North Dakota unit designation
Unit designations are generally viewed favorably by the Department of Mineral Resources because they streamline the regulatory process. Department Director Lynn Helms says from a regulatory standpoint, it is more efficient to work with a single operator.
Other North Dakota units have been designated for such pools as the Duperow, Heath, Lodgepole, Madison, Radcliff, Spearfish and Tyler, but QEPs would be only the second for the Bakken/Three Forks formations. The other Bakken/Three Forks unit is the Corral Creek unit in north-central Dunn County that was approved for Burlington Resources in 2012. At approximately 31,000 acres, the Corral Creek unit is slightly larger than the proposed Grail unit.
While there are definitely advantages to getting unit designation, it is not necessarily an easy process. According Oil and Gas Division spokeswoman Maxine Herr, the petitioning operator must have the approval of at least 60 percent of the mineral rights owners before a unit can be approved, which for QEP involves more than 4,000 mineral rights owners.
Petition hearing
A hearing on QEP’s petition is scheduled for Nov. 13 at 9 a.m. at the University of North Dakota in Grand Forks. While such hearings are typically held in Bismarck, this hearing is being held in Grand Forks so the university’s geology and law students can attend. Herr says it is an excellent way for students to gain better insight into the process as well as offering additional education within the oil and gas industry.
