During the oil market’s downturn from mid-2014 through 2016, the Bakken Shale, primarily located in North Dakota, was at the forefront of the collapse. The Bakken rig count dropped from a high of 219 to a low of 24 as production fell by 300 Mb/d, or 24%. For many, it was time to write off the Bakken as a one-hit wonder. But as drilling productivity increased and prices rebounded, so did production. Crude oil output is again above 1.1 MMb/d and the rig count has doubled from its low point. Today, we begin a blog series on recent developments in Bakken production, well productivity and market pricing, and discuss RBN’s latest production forecast for the play.
The history of Bakken crude oil production goes way back to 1953, when the formation’s first well came online, according to the North Dakota Department of Mineral Resources. Meridian Oil in 1987 was the first company to attempt horizontal drilling in the Bakken, and in 2005 EOG Resources was a pioneer in combining horizontal drilling and hydraulic fracturing in Mountrail County, ND, unlocking a new era for the play. Over the following 10 years, Bakken production (blue-shaded area and left axis in Figure 1) grew at a substantial rate, reaching its peak production (so far) in late 2014 at 1.26 MMb/d. Like almost everywhere else, though, the collapse in oil prices that started in the latter half of 2014 took its toll on Bakken drilling and production through 2016. Finally, over the course of 2017, higher prices resulted in more rigs, more completed wells and the start of a Bakken rebound.
As producers in the Bakken reduced their capital expenditures in 2015-16, the Bakken’s oil rig count dropped from the low 200s to a low of 24 (orange line and right axis in Figure 1) in June 2016, with most of the decline occurring in 2015. Shortly thereafter, production fell too, dropping from 1.26 MMb/d at the end of 2014 to below 1 MMb/d by the summer of 2016, bottoming out at just under 960 Mb/d in December 2016 (see What Goes Up). Since then, crude oil prices have recovered to well above $55/bbl and we’ve seen the rig count steadily rise, averaging almost 50 rigs in the latter half of 2017. Bakken production climbed back over the 1 MMb/d mark in February 2017 and rose another 100 Mb/d or so over the next 10 months — putting the play’s output close to its peak level three-plus years ago.