In Terms of the Bakken

The phrases, words and terms that reveal the evolution of the Bakken. From energy corridors to long-reach laterals, the Bakken shale play has fostered the growth and use of industry phrases that now define the U.S. These are the most important.
By North American Shale magazine staff | May 06, 2019

From North American Shale Magazine's 2019 Bakken Report: 

Tim Wallace believes the shale energy services industry is on a path to make better use of data to improve performance, much like artificial intelligence applications with predictive analytics and IBM’s Watson computer. The Bakken shale play has evolved from an undeveloped unconventional oilfield into a globally recognized hydrocarbon producer capable of impacting world markets. At one time, the play consisted of only a handful of wildcatting operators and pioneering energy service firms willing to invest time and money into drilling and hydraulic fracturing technology unproven in the region—or anywhere else in the world. From the early days of Hail Mary fracks in Eastern Montana to the Parshall field to the latest iteration of the Bakken, the Williston Basin’s most-important geological formation has supplanted its place in the energy history of the world. In doing so, the Bakken has revealed itself as a massive, light, tight-oil-producing shale formation capable of yielding more than one million barrels of oil per day. During its rise as a global energy phenomenon, the Bakken has supplied oil and gas industry stakeholders, decision makers, investors, executives and the general public with a never-ending vocabulary list capable of defining the Bakken at the particular time during which a phrase or term was spoken or referenced most prominently. Understanding the evolution—including the past and the near-term future—of the Bakken means understanding the time-linked terminology of the play.

Words From the Well Pad

Held By Production
From the mid-2000s to 2013, the Bakken’s rig count rose dramatically before stabilizing in the high hundreds. Knowledge of the Bakken formation’s possibilities as an oil producer were well-documented and the play was creating unprecedented oil and gas production, construction and workforce opportunities in the areas most targeted. The success rate on a new well horizontally drilled and hydraulically fractured in the Middle Bakken formation of the greater Williston Basin was nearly 100 percent. As small-, mid- and large-scale operators rushed to secure future drilling and production rights throughout western North Dakota and eastern Montana, the play yielded a three-letter acronym capable of summing up this era of the Bakken’s evolution: HBP (Held-By-Production).

To secure drilling rights and future production opportunities, E&P’s needed to secure their lease rights on contracted acreage. Doing so required the operators to drill at least one producing well on their contracted acreage within a specified period from the lease signing (typically three years), to avoid violating the terms of the lease, and jeopardizing the validity of the lease. “When you are scrambling to get a lease Held By Production, you kind of put economics on the back burner,” said Ken DeCubellis, the acting CEO in 2013 for non-operator Black Ridge Oil & Gas.

During the time of HBP activity, operators paid higher prices per hour to keep a drilling rig spudding wells. Less-efficient, older rigs remained in service to keep up with demand. The HBP era was the end of a time when services and strategies were less focused on efficiency and cost-savings and guided instead on securing a future at any cost.

Infill Development
After most of the Bakken’s acreage was HBP’ed and operators had the opportunity to focus more on developing—rather than securing—what they had, most began proving out and delineating the possibilities. Infill development was a term used to explain the strategies of operators as they looked to place future wellbores into specific geographical zones and specific and horizontal lateral lengths. Those focusing on infill development were those capable of moving past the initial rush to secure acreage. Infill development spawned several innovative drilling, completion and production strategies that are still deployed in shale fields across the U.S.

Multiwell Pad Drilling
The success of the infill development era in the Bakken was made possible due in large part due to multiwell pad drilling. Because operators no longer had to drill a single well on a lease and then move a rig to another lease also waiting to be HBP’ed, operators could leave a drilling rig on a single pad longer. The practice allowed for multiple wells to be placed on a single pad. Pads started to get bigger and more elaborate. Walking drilling rigs capable of deploying hydraulic lifts to move the rig from one spud hole to another greatly decreased the time it took to go from one wellbore to two wellbores on a single pad. From a single pad, operators learned they could place multiple wells and target the same, or different formations while still giving them the ability to effectively drain their reservoir through methods available at the time.

Energy Corridors
The North Dakota Department of Mineral Resources created the first-ever energy corridors. The term was used to describe a top-surface geographic orientation that maximized industry’s access to well sites while minimizing their presence on the landscape. Spacing units that once showed random wellbore lines running in all directions and at different lengths transformed into more unified images showing wells running in unison in a single direction. North Dakota energy leaders utilized 1,280-acre spacing units to create a uniform pattern of development that helped with pipelines, electrical lines and traffic patterns.

Decline Curves
With each new operational advancement in the field, every well has become better and holds more promise than previous versions. The advancements could be linked to drilling more precise wellbores or fracturing more of the reservoir through new technology or approaches, but either way, decline curves have been a topic since the early days of the Bakken. Operators, analysts and investors all like to talk about how fast a well will decline in production. The initial production rate (linked to a period like 30 days or 3 months) is continuously rising in the Bakken. Decline rates have also risen, showing that new fracking and drilling techniques are making wells produce more oil at higher rates over a longer period.

Long-Reach Laterals
In the early development of the Bakken formation, most laterals were drilled to 8,000 feet or less. By the time engineers and investors were referring to long-reach laterals, the length of a lateral had changed. Most long-reach laterals placed in the middle Bakken today extend to three miles or roughly 13,000 feet. More efficient drilling bits, extended-reach coiled-tubing spools and more powerful drilling rig systems now allow operators to drill longer laterals, which they say can produce more oil from a single well.

Often misunderstood as a practice of wasting or getting rid of unwanted associated gas produced during the oil retrieval process, the term flaring drew national attention to the Bakken. Still a challenge that operators deal with today, flaring has referred to the venting of associated gas that takes place due to inadequate or a lack thereof of takeaway or gathering infrastructure. Technology creators, midstream companies, investors, policy makers and the public have all played a strong role in the usage of the term. In the early development days of the Bakken, flaring was common across the play and more than two-thirds of all gas produced in the play was flared. Today, infrastructure has been installed to take away gas streams in accessible locations. For the remote and hard-to-reach areas of the Bakken, technology providers have created economically feasible options to capture and remove associated gas from the play.

Advancements in mud motors, drill bit materials and strategies to reach total depth on a well have come a long way. In the early days of the Bakken, a drilling rig crew typically required 45 to 60 days to drill an 8,000-foot well from spud (the surface hole) to the toe of the horizontal (total depth). The term became important and often referenced when the drilling rig count declined in the Bakken and other U.S. shale plays while production and activity levels remained. The U.S. Energy Information Administration also began tracking drilling rig counts and how efficient the rigs in each play were as the Spud-to-TD times fell across the U.S.

From late 2014 through 2017, the Bakken experienced a major decrease in activity due to low oil prices. Operators were unable to continue at their planned activity levels and had to pull back certain operations. Many began holding off on completing wells that had been horizontally drilled and were waiting to be hydraulically fractured before going on production. Research analysts began tracking the number of DUCs, or wells that were drilled but uncompleted. The state of North Dakota did the same. Some operators had to choose whether to invest or continue with a drilling contract and drill new wells, or spend their money completing wells. DUCs are still tracked today but have less prominence in the national context of shale oil production.

Words Away From the Wellhead

Oil takeaway capacity via any means has always been an issue in the Bakken. As the Bakken’s production grew from the mid 2000’s to now, there has always been a disproportionate amount of takeaway infrastructure—pipeline, rail or truck—to match the supply from the play. Between 2013 and 2016, one of the prominent means to move Bakken oil to the East or West Coast was via rail. The reference to the transportation style helped advance the tank car specifications used to move oil across the country. Investors tracked the usage of crude-by-rail and the practice spawned the growth and importance of another Bakken staple.

Transload Facilities
The geographic sprawl of the Bakken puts wells in remote locations that are tough to get to or take a long time to return from to a major community. Transload facilities started to rise in popularity as the play developed. Operators, midstream firms and construction or logistics teams needed to more-efficiently and economically bring in and store equipment, goods or materials. Several facilities grew to offer sand storage, piping and casing yards and oil storage or offtake infrastructure connected via pipeline to larger pipelines running out of the region.

Saltwater Disposal Wells
Like most shale plays, the Bakken system produces high volumes of saltwater brine during production. SWDs, or saltwater disposal wells, have grown in existence throughout the play. Wells are drilled into the Dakota formation where produced water is injected underground or stored at a SWD facility.

At the start of the oil price downturn at the end of 2014, investors, analysts, oil price predictors and oil company executives all used the phrase lower-for-longer to insinuate which direction they believed oil prices would head in the months ahead. The term was present in the shale world’s lexicon for roughly two-and-a-half years and brought on another term.

As operators began to find ways to maintain operations, workforce numbers and production numbers, the term breakeven was introduced into the Bakken scene and has been referred to ever since. Investors, operators and service companies all began to explain their breakeven costs. The term refers to the price point oil has to trade at for the investment of an oil well, service or operation to keep the company from losing money. Breakeven price numbers were estimated for geographical regions of the Bakken and were impacted by several factors, including infrastructure availability, lease operating expenses, and the initial rate of return a company was willing to take at any given oil price.

Cash Flow
With investors now looking to benefit from previous investments into shale energy production companies increasing, many oil and gas production executives are telling the industry that their plan for operation will remain within cash flow. Before the current investor push, operators were willing to outspend their yearly cashflow by taking on debt to drill and frack new wells. The goal was to grow production. Today, with a push to please investors, operators are focused more on operating within cash flow and limiting operations based on the amount of money they have generated from existing operations.

Two Million Barrels
The main trend over time for Bakken oil and gas production is associated with increases. The Bakken formation, which currently accounts for nearly 95 percent of all the oil produced in North Dakota, has been pumping out more than 1 million barrels of oil per day for several straight years. Government officials and industry have both pushed for the Bakken players to continue the production increase trend in the coming months and years and work to surpass 2 million barrels per day.

~From The Bakken Report 2019 print issue