Bakken crude oil production and rigs
On July 13, 2015, the EIA (U.S. Energy Information Administration) released its Drilling Productivity Report. It estimates that in June 2015, the Bakken shale produced 1.22 MMbpd (million barrels per day) of crude oil. This is 1.3% less than May production levels but 9% greater than production a year ago. In June, Bakken shale month-over-month crude oil production dipped for the second time in a row.
The number of rigs working at the Bakken decreased to 75 in June, down from 78 in May. A year ago, there were 174 drilling rigs in the region. Most of these rigs are horizontal in trajectory, or type.
Shale oil production at the Bakken increased from ~136 Mbpd (thousand barrels per day) in June 2007 to ~1.22 MMbpd in June 2015. This represents nearly an 800% increase in eight years.
In June, the Bakken shale produced 642 barrels of crude oil per day per rig, a 51% gain in production per rig since June 2014.
Increasing US production has led to a fall in crude oil prices. As oil prices remain suppressed, oil producers will have less incentive to increase production. Production may even fall, as we’re now seeing with Bakken production.
What this means for energy companies
The recent fall in production will hurt Bakken shale producers that may be behind this drop. Some Bakken-based producers include Denbury Resources (DNR), Continental Resources (CLR), SM Energy (SM), Marathon Oil Corporation (MRO), and EOG Resources (EOG). SM Energy and Marathon Oil Corporation together account for 3.14% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
Williston Basin has highest tight oil reserves
The Williston Basin’s large size and number of wells have unlocked huge oil reserves in the region. The most productive formations for horizontal drilling and hydraulic fracturing are in Williston Basin’s Bakken and Three Forks formations.
According to the EIA, the Bakken Three Forks play that covers portions of North Dakota, Montana, and South Dakota has the largest tight oil proved reserves in the United States.
In the next part of this series, we’ll look at crude oil and natural gas production at the Niobrara shale.