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).
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