Post on 09-Jun-2018
600 East Boulevard Ave. - Dept 405 Bismarck, ND 58505-0840
(701) 328-8020 (701) 328-8000
North Dakota Department of Mineral Resources
http://www.state.nd.us/ndgshttp://www.oilgas.nd.gov
North Dakota Industrial Commission Cases Heard
0
500
1000
1500
2000
2500
3000
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
North Dakota New Well Permits Issued
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Western North Dakota
• 1,100 to 2,700 wells/year = 2,000 expected
– 100-225 rigs = 12,000 – 27,000 jobs = 20,000 expected
– 225 rigs can drill the 5,000 wells needed to secure leases in 2.5 years
– 225 rigs can drill the 28,000 wells needed to develop spacing units in 14 years
– 33,000 new wells = thousands of long term jobs
North Dakota Average Monthly Rig Count
0
50
100
150
200
250
1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015
Rig
s
Rig Count ND Sweet Oil Price
200 Rigs
North Dakota Idle Wells
0
150
300
450
600
750
900
1,050
1,200
1,350
1,500
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Idle
Wel
ls
$0
$15
$30
$45
$60
$75
$90
$105
$120
$135
$150
$/B
bl N
D S
wee
t
Typical Bakken Well Production
0
200
400
600
800
1000
1200
0 5 10 15 20 25 30
Year
Bar
rels
of O
il pe
r Day
What Does Every New Bakken Well Mean to North Dakota
A typical 2011 North Dakota Bakken well will produce for 28 years
If economic, enhanced oil recovery efforts canextend the life of the well
In those 28 years the average Bakken well:
Produces approximately 550,000 barrels of oil
Generates over $20 million net profit
Pays approximately $4,360,000 in taxes$2,100,000 gross production taxes$1,900,000 extraction tax$360,000 sales tax
Pays royalties of $7,600,000 to mineral owners
Pays salaries and wages of $1,600,000
Pays operating expenses of $2,300,000
Costs $7,300,000 to drill and complete
North Dakota Oil Production and Price
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
Bar
rels
per
Day
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
ND
Swee
tPric
e$/
barr
el
History Bakken - Three Forks P10 Bakken - Three Forks P50
Bakken - Three Forks P90 $/Barrel History & DOE-EIA Projected $/Barrel P50
$/Barrel P10
2,600 Bakken and Three Forks wells drilled and completed30,000 more new wells possible in thermal mature areaP90=5 BBO – P50=7 BBO – P10=11 BBO (billion barrels of oil)
P90P50
P10
North Dakota Monthly Gas Produced and Price
01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000
10,000,00011,000,00012,000,00013,000,00014,000,00015,000,000
1985 1990 1995 2000 2005 2010 2015
MC
F
$0$2$4$6$8$10$12$14$16$18$20$22$24$26$28$30
$/M
CF
$ perMCF MCF GAS PRODUCED
North Dakota Monthly Gas Flared
0%
5%
10%
15%
20%
25%
30%
35%
1985 1990 1995 2000 2005 2010
2,400 wells=90MW
5,000 wells
=185MW
File No Status Sec Twp Rng Spot Operator Name Well Name Field19051 DRL 10 162 78 SESE SURGE ENERGY USA INC. EIDSVOLD 1-10H WILDCAT18701 A 36 164 78 NESE SURGE ENERGY USA INC. SCANDIA 3-36H SOURIS18997 IA 27 163 78 NENE SURGE ENERGY USA INC. BOUNDARY 4-27H WILDCAT19099 IA 20 163 78 SWNW SURGE ENERGY USA INC. BOUNDARY 11-20H ROTH18699 A 34 164 78 NENE SURGE ENERGY USA INC. SCANDIA 1-34H SOURIS18898 A 11 163 78 NENE SURGE ENERGY USA INC. BOUNDARY 1-11H WILDCAT18783 A 28 164 77 LOT 1 CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 3-28 NORTH SOURIS18709 A 27 164 77 LOT 2 CORINTHIAN EXPLORATION (USA) CORP SYLVIA 1-27 NORTH SOURIS19384 IA 33 164 77 NWSW CORINTHIAN EXPLORATION (USA) CORP BERNSTEIN 33C 1 NORTH SOURIS19385 A 4 163 77 NENW CORINTHIAN EXPLORATION (USA) CORP BERNSTEIN 4B 1 NORTH SOURIS19386 A 5 163 77 NWSE CORINTHIAN EXPLORATION (USA) CORP BERNSTEIN 1 WILDCAT10318 A 28 164 77 SWSW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 28-2 NORTH SOURIS7606 A 33 164 77 NWNW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 4-33 NORTH SOURIS1401 A 34 164 77 NESW CORINTHIAN EXPLORATION (USA) CORP 1-BACKMAN 34BCD NORTH SOURIS11317 A 4 163 77 NENE CORINTHIAN EXPLORATION (USA) CORP OLSON 2-104 NORTH SOURIS4838 IA 28 164 77 SESW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 1-28 NORTH SOURIS4816 A 33 164 77 NENW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 33-2 NORTH SOURIS4817 IA 33 164 77 SENE CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 33-3 NORTH SOURIS4819 A 33 164 77 SESE CORINTHIAN EXPLORATION (USA) CORP OLSON 33-1 NORTH SOURIS884 A 33 164 77 SENW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 1 NORTH SOURIS968 A 33 164 77 NWSE CORINTHIAN EXPLORATION (USA) CORP MOEN 1 NORTH SOURIS932 A 33 164 77 SWNE CORINTHIAN EXPLORATION (USA) CORP CARL 1 NORTH SOURIS1038 A 33 164 77 NESE CORINTHIAN EXPLORATION (USA) CORP CLARA MOEN 1-33 NORTH SOURIS19613 DRL 18 163 76 NWSW LEGACY OIL & GAS ND, INC. LEGACY ETAL FETT 12-18 1-H WILDCAT19612 DRL 1 163 77 NESE LEGACY OIL & GAS ND, INC. LEGACY ETAL BERGE 9-1H 1-H WILDCAT19588 DRL 12 163 77 NWSW LEGACY OIL & GAS ND, INC. LEGACY ETAL BERGE 12-12H 1-H WILDCAT19682 LOC 19 163 76 NWSW LEGACY OIL & GAS ND, INC. LEGACY ETAL FETT 12-19H 1-H WILDCAT20129 LOC 10 162 76 SWNW LEGACY OIL & GAS ND, INC. LEGACY ETAL BLISS 5-10H 1-H WILDCAT19462 DRL 19 163 76 NWNW LEGACY OIL & GAS ND, INC. LEGACY ETAL EMERY NORM 4-19H 1-H WILDCAT19567 DRL 10 162 76 SWSW LEGACY OIL & GAS ND, INC. LEGACY ETAL BLISS 13-10H 1-H WILDCAT21323 LOC 18 163 76 NWNW LEGACY OIL & GAS ND, INC. LEGACY ETAL BERNSTEIN 4-18H 1-H WILDCAT21389 LOC 12 163 77 NENE LEGACY OIL & GAS ND, INC. LEGACY ET AL BERGE 1-12H WILDCAT
We have received a number of enquires from the mineral industry in the past 18 months as the price increased for a variety of elements and minerals. Chief among these enquiries has been uranium and potash. Uranium was mined in North Dakota in the 1960s. It was heavily explored for in the 1970s, but has been of little interest for the last 30 years until the price for uranium oxide reached an all time high in June of 2007. Companies have also expressed interest in associated elements molybdenum and germanium. If a company submits a permit to do in situ leach uranium mining, we will need a geologist dedicated full-time to that project. We are aware of three companies that are contemplating mining uranium in southwestern North Dakota.
Potash or potassium salts are primarily used in the production of fertilizer. Potash exploration took place in northwest North Dakota in the 1970s. Since the beginning of 2007, the price of potash has risen from $190 to $1,050 per ton based on a low supply and increasing demand. Due to the increased workload, we will need a geologist to oversee potash exploration and production if we receive a permit from either of the two companies that we know are actively pursuing potash exploitation.
Potash core from a depth of 9,000 feet in Burke County.
Formation Resources drilling for uranium, molybedenum, and germanium under a subsurface mineral permit in Billings County during the fall of 2008.
Counties that contain uranium deposits are in yellow and those that contain the shallowest potash deposits are in blue.
Estimate 20-50 billion tons of ND Mineable Reserves
$6 trillion -15 trillion
The future looks promising for sustained Bakken/Three Forks
development
Cap and trade proposals in
congress could reduce activity an estimated
35-40%
EPA regulation of hydraulic fracturing
could halt drilling activity for 18-24 months
production decline of 25-30%
Current administration
budget contains tax rule changes
that could reduce activity an estimated
35-50%
Federal minor source air permits require 6 -12 months for approval
Oil price below $50 WTI could reduce activity an estimated
25-30%
Hydraulic Fracturing
Lifeline to Domestic Energy
• Hydraulic Fracturing• Why• How
• State Regulation
WHY FRACK THE ROCK?
• Easy oil is already developed• oil that flows without fracing
• Unconventional Reserves• reservoirs are tight
• look at sample• uneconomic to produce without fracing• must create a path for oil to flow
Performing hydraulic fracture stimulation south of Tioga• all Bakken wells must be hydraulically fractured to produce• 2-4 million gallons of water• 3-5 million pounds of sand and ceramic• cost $2-5 million
Thousands of fractures are created
• pumping water at 6,000-9,000 psi
• millions of pounds of sand and ceramic beads are pumped with the water to hold the fractures open.
Ball and Sleeve
• up to 40 stages
• ball opens the liner sleeve
Stage Fracturing
• up to 40 stages
Purposes of frac fluid
• crack the reservoir
• gel strength to carry sand
Frac fluid is produced back as flowback and produced water
Each hydraulic fracturing stage creates hundreds of fractures
extending several hundred feet from wellbore
4.5”FracString
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
TYPICAL HORIZONTAL OIL WELL
Cement
Packer
Run in hole with:• 4.5” liner• 30-40 swell packers
• sliding sleeves
4.5” liner
States have been regulating the full life cycle of hydraulic
fracturing for decades
• Geology of each sedimentary basin is different• Water Appropriation Regulation• Oil & Gas Regulation• Health and Environmental Regulation
North Dakota has been regulating the full life cycle of
hydraulic fracturing for decades
•Water Commission•water supply
• Industrial Commission•well construction•disposal of flow back water
• Health Department•spill cleanup
Water Commission Regulation
• Regulate water appropriations
• Guard against withdrawals exceeding recharge
Thirsty Horizontal Wells
• 2,000 - 3,000 wells / year• 15 - 25 years duration• 20 - 30 million gallons water / day
Glacial Drift Aquifers
FRAC WATER NEEDS
• Lake Sakakawea (Missouri River) is the best water resource
• one inch contains 10 billion gal water• 5,000 wells @ 2 million gal/well• 30 million gallons per day
Industrial Commission Regulation
• Well construction for Hydraulic fracturing• Two casing strings required• Both strings must be cemented• Pressure tests required• Frac is > 1.5 mile below potable water
4 ½” Frac String
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
• Drill with fresh water• Total depth below lowest potable water• Run in hole with surface casing• 1st layer of surface water protection• Cement casing back to surface of ground• 2nd layer of surface water protection
TYPICAL HORIZONTAL OIL WELL
9-5/8” in 13.5” Hole
7” Casing
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
TYPICAL HORIZONTAL OIL WELL
9-5/8” in 13.5” Hole
Cement
Kick-offPoint • Drill vertically to kick-off point
• Run in hole with bent assembly• Downhole mud motor
7” Casing
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
• Drill 8-3/4” hole to pay• Run in hole with 7” casing• 3rd layer of protection• Cement 7” casing• 4th layer of protection
TYPICAL HORIZONTAL OIL WELL
9-5/8” in 13.5” Hole
Cement
Kick-offPoint
BuildSection
7” Casing
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
• Drill lateral in pay• Run in hole with 7” casing• Cement 7” casing• 2nd layer of protection
TYPICAL HORIZONTAL OIL WELL
9-5/8” in 13.5” Hole
Cement
Kick-offPoint
Horizontal lateral
BuildSection • Drill 6” horizontal hole in pay
4.5”FrackString
Upper Bakken Shale
Lower Bakken Shale
Middle Bakken
Potable Waters
TYPICAL HORIZONTAL OIL WELL
Cement
Packer
Run in hole with:• 4.5” liner• 30-40 swell packers• sliding sleeves• 4.5” frack string• 5th layer of protection
4.5” liner
Industrial Commission Regulation
• Water flowback after frac• Storage in open pits prohibited• Disposal wells permitted through
Underground Injection Program• Disposal zone is 2,500 feet below
potable waters with impermeable shale between
300 disposal wells
450,000 barrels water/day
Health Department Regulation
• Cleanup of discharge to environment• Coordinate with local Emergency Managers• Emergency Planning and Community
Right-to-know Act (EPCRA)• Congress passed for storing and handling of
chemicals•Requires material safety data sheet (MSDS)
for each chemical on location
• Compound– Purpose
• Common application
• Fresh Water – 80.5%• Proppant – 19.0%
– Allows the fractures to remain open so the oil and gas can escape• Drinking water filtration, play ground sand
• Acids - 0.12%– Help dissolve minerals and initiate fractures in rock (pre-fracture)
• Swimming pool cleaner• Petroleum distillates – 0.088%
– Dissolve polymers and minimize friction• Make-up remover, laxatives, and candy
• Isopropanol – 0.081%– Increases the viscosity of the fracture fluid
• Glass cleaner, antiperspirant, and hair color• Potassium chloride – 0.06%
– Creates a brine carrier fluid• Low-sodium table salt substitute
• Guar gum – 0.056%– Thickens the water to suspend the sand
• Thickener used in cosmetics, baked goods, ice cream, toothpaste, sauces, and salad dressing• Ethylene glycol – 0.043%
– Prevents scale deposits in the pipe• Automotive antifreeze, household cleansers, deicing, and caulk
• Sodium or potassium carbonate – 0.011%– Improves the effectiveness of other components, such as cross-linkers
• Washing soda, detergents, soap, water softeners, glass and ceramics• Sodium Chloride – 0.01%
– Delays break down of the gel polymer chains• Table Salt
• Polyacrylamide – 0.009%– Minimizes friction between fluid and pipe
• Water treatment, soil conditioner• Ammonium bisulfite – 0.008%
– Removes oxygen from the water to protect the pipe from corrosion• Cosmetics, food and beverage processing, water treatment
• Borate salts – 0.007%– Maintain fluid viscosity as temperature increases
• Used in laundry detergents, hand soaps and cosmetics• Citric Acid – 0.004%
– Prevents precipitation of metal oxides• Food additive; food and beverages; lemon juice
• N, n-Dimethyl formamide – 0.002%– Prevents the corrosion of the pipe
• Used in pharmaceuticals, acrylic fibers and plastics• Glutaraldehyde – 0.001%
– Eliminates bacteria in the water• Disinfectant; Sterilizer for medical and dental equipment
Hydraulic Fracturing Stimulation is Safe
• IOGCC survey—no contamination• EPA survey – no contamination• GWPC study verifies State’s regs• GWPC National Registry f/chemicals
•FracFocus
Vern Whitten Photography