The Bakken Shale is being hit especially hard by production cuts this spring. Crude oil-focused producers large and small have been shutting in wells and putting well completions on hold, slashing daily crude output by more than one-sixth. The rig count is down by half in less than two months — to 26, the play’s lowest level since mid-2016 — and thousands of oilfield workers have been let go. All this is happening despite the facts that the Bakken’s four-county core has some of the best shale assets outside the Permian and that in 2017-19 the play was super-hot, with crude production increasing by 50%. That three-year growth spurt spurred the development of a number of new crude gathering systems, many of which now face a period of significant underutilization. Today, we discuss highlights from our new Drill Down report on oil production and supporting infrastructure in the U.S.’s #2 shale play.
North Dakota joined the ranks of oil-producing states in the early 1950s. One of the earliest commercial wells was drilled by Amerada Petroleum — a corporate ancestor of Hess Corp. — on a Williams County farm owned by Henry O. Bakken, the son of Norwegian immigrants. The vertical well produced a total of more than 250 Mbbl; its success is believed to be tied to a natural fracture in a rock formation that freed large volumes of crude. (The formation or layer came to be called — you guessed it — the Bakken.) It took another 50-plus years for producers to perfect hydraulic fracturing, and western North Dakota was one of the first areas where the process was used to release large volumes of crude oil.
As shown in Figure 1, between the beginning of 2010 and the end of 2014, Bakken crude production increased by about 400%, from ~250 Mb/d to ~1.26 MMb/d, according to the Energy Information Administration (EIA). But the mid-decade collapse in oil prices hit the Bakken hard. By December 2016, crude production there had bottomed out at less than 960 Mb/d (blue area), and the number of active rigs in the play had plummeted to 32, from 182 rigs two years earlier (orange line).
Join Backstage Pass to Read Full Article
About the song
"Dakota" was written by Kelly Jones, and is the fifth song on Stereophonics’ fifth studio album. Released as the first single from the album in February 2005, it became the only Stereophonics single to hit the U.S. charts to date. It went to #34 on the Billboard Modern Rock Tracks chart after receiving airplay on alternative rock radio in the U.S. The song went to #1 on the UK Singles chart.
Stereophonics is a Welsh rock band formed in 1992 in Cwmaman, Wales — for our readers who aren’t fluent in Welsh, Cwmaman sounds a lot like “Come on, man.” The group has released 11 studio albums, one live album, one compilation album, four EPs and 43 singles. Stereophonics has won one Brit Award and has sold close to 10 million records worldwide. The current lineup of Kelly Jones, Richard Jones, Adam Zindani and Jamie Morrison still record and tour.
Comments
We hear so much about take-or-pay contracts and that these pipelines will get paid per the contract regardless of how much product goes through the line. Is that true and if so, when wells are shut in and producers aren't producing anything, and they still have to pay the pipelines, how much of a factor is that in leading towards bankruptcy for the producers? It seems to me it would be a disadvantage to the pipeline owners to try to squeeze the producers but on the other hand they also have debts and dividends to pay. What, if anything, is the solution?