Big moments from WBPC 2014

A breakdown of the memorable speeches, stats and stories from the Bakken's biggest industry gathering of the year: the Williston Basin Petroleum Conference 2014.
By Luke Geiver | June 23, 2014

The Williston Basin Petroleum Conference has ascended from event to industry institution. This year’s show broke attendance and exhibit records. Attendees had opportunities to speak with providers of well site-specific clothing and the operators responsible for the actual wells. CEOs were there. Partnerships were announced and, without a doubt, new strategic relationships were conceived.
Massive oilfield equipment was on display, and stories on the future of the Williston Basin development flowed like light, sweet crude for three days in Bismarck at the Bakken’s biggest spectacle.

Think Long Term, Act Now
Lynn Helms, director of the North Dakota Department of Mineral Resources, offered an in-depth account on the Williston Basin and a serious look at the future of western North Dakota’s oilfields. “There will be five generations of North Dakotans and people around the world impacted by the Bakken and Three Forks,” he said. “That means what we do today will impact our grandchildren’s grandchildren.”

Helms has overseen the regulatory development of the Bakken since its inception. Although his oversight has meant dealing with issues new to him and his staff, his presentation’s mantra was linked to the idea of longevity. The state, the industry, and anyone involved with the oil and gas industry needs to think long-term, but act now, he said. The ideal is already in action with the construction of crucial infrastructure to handle oil and gas. The boom in infrastructure will only continue, he said. “There is a huge amount of work and production ahead of us.”

In the Bakken and Three Forks formations, the industry is now entering full optimization mode. Roughly 90 percent of the core Williston Basin acreage in both formations has been derisked. Because the acreage has been proven, operators are now experimenting with interwell spacing and multiwell pads, some moving to 18-well pads.

Although the Bakken and Three Forks are proven to be economical oil producers, the methods for oil extraction still vary in type and success. “We’ve been doing this since 2004 and we don’t know how many wells it is going to take to achieve ultimate primary recovery from this incredible resource,” Helms said. “There has been a tremendous amount of work to increase the recovery factor, and that will continue.” Investments in ultimate recovery rates have focused on completion design and optimal well spacing to date, and experimentation with both will continue. “I hope I can stand up here two years from now and tell you that we found the answer, but I can’t assure you of that.”

As the industry continues to experiment with downspacing and completion design, it will also have to learn how to capture more flared gas. With the start of a new protocol designed to require operators to formulate, and eventually implement, a plan to capture more associated gas produced during oil retrieval, Helms and his team plan to spend the next six months making the gas capture plan efficient and effective for industry and the state. Because no other states have dealt with the type of flaring that the Williston Basin features, the team cannot look to others for examples. “We are really the first to try and do all of this stuff with gas capture,” he said.

While the team will be focused on streamlining the gas capture plan process, others from the DMR will continue work to research potential source rocks present below the Bakken and Three Forks formations. According to Helms, there are six formations that could potentially hold value as unconventional resources.

CEO Perspective
Harold Hamm, Jim Volker and Thomas Nusz, all CEOs of their respective exploration and production companies, heavily focused on developing the Bakken, shared the stage to provide updates and new perspective on their accomplishments in the Williston Basin. The message of Hamm’s presentation was headline worthy. “I ultimately predict we will be producing 2 million barrels per day,” he said. “I don’t think that is over the top.”

Continental is working to identify the best option for developing its resources through well density and spacing tests. The entire Bakken industry is monitoring that work, Hamm said. The industry is also in fear of another crude-by-rail incident; something Hamm said could negatively impact production.

Jim Volker, CEO of Whiting Petroleum Corp., spoke about Whiting’s production history in the Williston Basin and how it has increased the size of the Denver-based company. “Whiting is a rapidly growing company due, in large part, to its efforts in North Dakota,” he said. In 2014, Whiting’s Williston Basin production reached an all-time high, and the company also set a record for its discretionary cash flow.
The future for Whiting looks promising, due, in part,  to recently applied completion designs involving cemented liners and coiled tubing, Volker said. The design has increased oil production by as much as 70 percent in wells that have used the new design. The knowledge Whiting Petroleum has gained in the Bakken, including from the new methods, has Volker excited for new ventures the company will develop on new acreage in Colorado. 

Thomas Nusz, CEO of Oasis Petroleum, also shared perspective on the Bakken pure-play’s completion methodology along with its plans for growth.

“Depending on whose projections you look at over the next three to five years, we [industry] could be producing 1.5 to 1.8 million barrels of oil per day,” Nusz said. If the high estimates are reached, Oasis will be playing a major role. “We are so efficient with drilling,” Nusz said. In 2010, Oasis was drilling 10 wells per drilling rig per year. Four years later, the team is drilling 14 wells per drilling rig per year, and the company has increased the number of drilling rigs it operates. Oasis has a drilling inventory that should last 17 years. It currently produces 43,000 bopd on roughly 500,000 acres.

Like Continental, 2014 will be a year devoted in large part to downspacing tests and experimentation with completion design. “As we go into the second half of the year, we will have about 60 percent of our wells that will have something other than our base completion design,” Nusz said. The current design used by Oasis included a 36-stage frack with roughly 4 million pounds of proppant. According to Nusz, the company has found recent success with slickwater fracks. A seven-well pad to be completed this year will feature slickwater frack jobs on every well, he said, to illustrate his point. “We are trying to optimize what we have before we go into full field development and start punching these things out,” Nusz said.

Planning efforts by Oasis have become complex. In year’s past, the company needed only 18 months to plan for new wells, but that has changed. “We have had to change our planning horizons from 18 months to 36 months. In the first part of this year, we were already starting to lay out our plans for 2015,” he said.

Crude Characteristics
Determined
A study of the characteristics of Bakken crude was completed in time for the event. Jeff Hume, vice president of strategic growth initiatives for Continental Resources, provided an inside look at how the study was conducted and what the results reveal. Several operators joined together for the study, Hume said, so that it would provide more comprehensive results.

Turner, Mason & Co., designed and performed the study. The tests involved 15 well sites and seven rail car terminals resulting in 152 samples of crude taken from every region of the Williston Basin. The study cost $400,000 and the results offer verifi able insight into Bakken crude. According to the North Dakota Petroleum Council, the study results showed that Bakken crude “does not pose a greater risk to transport by rail that other transportation fuels.”

Separate tests involving samples from a rail facility also helped to prove Bakken crude’s stability in different temperatures and in different geographic regions. Samples collected from a rail facility from August to March showed that the crude’s stability remained roughly the same in different temperatures. A study also tested crude in five rail cars located in North Dakota. The rail cars were shipped to St. James, Louisiana, and the crude was tested again. The tests showed the crude did not undergo any meaningful changes.

The main takeaways from the study are that Bakken crude is not corrosive and that it is consistent from the time it is taken from the well until it is delivered at an offload site following rail transport. All of the verified characteristics show that Bakken crude falls within the specifications to safely transport crude using existing U.S. DOT 111 railcars.

After a final summary of the test results is released this month, Hume said the team that worked on the tests will develop best practices for creating the most stable barrel of Bakken crude possible. “We are going to try and develop some standards,” he said. The standards could include a Bakken benchmark label that would represent a quality and characteristic standard of the liquid for anyone is involved in the handling and utilization of the product to see.

The Future of Bakken Crude
Helms and the oil company CEOs presented the study results on the event main stage, but many more  insights into the future of the Williston Basin were offered throughout the event.

Global oil and gas economist Vikas Dwivedi of Macquarie Securities Group presented on the global outlook for oil supply, including major factors that impact the global oil landscape. According to Dwivedi, the world’s demand for oil is climbing again. “We are back to pre-financial crisis oil demand growth,” he said. China’s demand for gasoline is clear, he said, noting that the country is on pace to sell 25 million gasoline-based cars this year. The U.S. topped out on gasoline-based car sales at 18 million nearly 10 years ago, he added.

The growing demand for oil is good and bad for the Bakken. For Dwivedi, the biggest issue for Bakken crude, or light sweet crude, is the light sweet crude refining capacity in the U.S. Unless the export ban is, however---allowing overseas refiners to take in light sweet crude—“we will be drowning in light sweet crude,” he said. By the end of the year, the U.S. may have more light sweet crude than it can handle. “We are living on borrowed time.”    

Over three days, roughly 4,500 people attended the 2014 WBPC. The trade show floor included 530 exhibitors, and 150 entities were classified as sponsors. Sean Hannity, a national radio voice, spoke on the main stage to an audience that filled the Bismarck Civic Center floor and the bleachers of the facility. His message to attendees was based on his favoritism of the Bakken, a place he regularly tells people throughout the country to head for in search of employment. To close the show, Ron Ness, president of the NDPC thanked those in attendance, and his staff. He also commented on his aspirations for the event. “We wanted to make this a world class event.”
 
Author: Luke Geiver
Managing Editor, The Bakken magazine
lgeiver@bbiinternational.com
701-738-4944