North Dakota Department of Mineral Resources

Transcription

1 North Dakota Department of Mineral Resources East Boulevard Ave. - Dept 405 Bismarck, ND (701) (701)

2 North Dakota Industrial Commission Cases Heard

3 North Dakota New Well Permits Issued

4 Western North Dakota 1,100 to 2,700 wells/year = 2,000 expected 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

5 North Dakota Average Monthly Rig Count Rigs Rig Count ND Sweet Oil Price

6 200 Rigs

7 North Dakota Idle Wells Idle Wells 1,500 1,350 1,200 1, $150 $135 $120 $105 $90 $75 $60 $45 $30 $15 $0 $/Bbl ND Sweet

8 Typical Bakken Well Production Barrels of Oil per Day Year

9 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 can extend 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

10 North Dakota Oil Production and Price 1,000,000 $1, , ,000 P10 $900 $800 Barrels per Day 700, , , , ,000 P50 P90 $700 $600 $500 $400 $ ,000 $ ,000 $100 0 $ ,600 Bakken and Three Forks wells drilled and completed 30,000 more new wells possible in thermal mature area P90=5 BBO P50=7 BBO P10=11 BBO (billion barrels of oil) History Bakken - Three Forks P10 Bakken - Three Forks P50 Bakken - Three Forks P90 $/Barrel History & DOE-EIA Projected $/Barrel P50 $/Barrel P10

11 MCF 15,000,000 14,000,000 13,000,000 12,000,000 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 North Dakota Monthly Gas Produced and Price $ permcf MCF GAS PRODUCED $30 $28 $26 $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 $/MCF

12

13 2,400 wells=90mw 5,000 wells =185MW

14 File No Status Sec Twp Rng Spot Operator Name Well Name Field DRL SESE SURGE ENERGY USA INC. EIDSVOLD 1-10H WILDCAT A NESE SURGE ENERGY USA INC. SCANDIA 3-36H SOURIS IA NENE SURGE ENERGY USA INC. BOUNDARY 4-27H WILDCAT IA SWNW SURGE ENERGY USA INC. BOUNDARY 11-20H ROTH A NENE SURGE ENERGY USA INC. SCANDIA 1-34H SOURIS A NENE SURGE ENERGY USA INC. BOUNDARY 1-11H WILDCAT A LOT 1 CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 3-28 NORTH SOURIS A LOT 2 CORINTHIAN EXPLORATION (USA) CORP SYLVIA 1-27 NORTH SOURIS IA NWSW CORINTHIAN EXPLORATION (USA) CORP BERNSTEIN 33C 1 NORTH SOURIS A NENW CORINTHIAN EXPLORATION (USA) CORP BERNSTEIN 4B 1 NORTH SOURIS A NWSE CORINTHIAN EXPLORATION (USA) CORP BERNSTEIN 1 WILDCAT A SWSW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 28-2 NORTH SOURIS 7606 A NWNW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 4-33 NORTH SOURIS 1401 A NESW CORINTHIAN EXPLORATION (USA) CORP 1-BACKMAN 34BCD NORTH SOURIS A NENE CORINTHIAN EXPLORATION (USA) CORP OLSON NORTH SOURIS 4838 IA SESW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 1-28 NORTH SOURIS 4816 A NENW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 33-2 NORTH SOURIS 4817 IA SENE CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 33-3 NORTH SOURIS 4819 A SESE CORINTHIAN EXPLORATION (USA) CORP OLSON 33-1 NORTH SOURIS 884 A SENW CORINTHIAN EXPLORATION (USA) CORP SKARPHOL 1 NORTH SOURIS 968 A NWSE CORINTHIAN EXPLORATION (USA) CORP MOEN 1 NORTH SOURIS 932 A SWNE CORINTHIAN EXPLORATION (USA) CORP CARL 1 NORTH SOURIS 1038 A NESE CORINTHIAN EXPLORATION (USA) CORP CLARA MOEN 1-33 NORTH SOURIS DRL NWSW LEGACY OIL & GAS ND, INC. LEGACY ETAL FETT H WILDCAT DRL NESE LEGACY OIL & GAS ND, INC. LEGACY ETAL BERGE 9-1H 1-H WILDCAT DRL NWSW LEGACY OIL & GAS ND, INC. LEGACY ETAL BERGE 12-12H 1-H WILDCAT LOC NWSW LEGACY OIL & GAS ND, INC. LEGACY ETAL FETT 12-19H 1-H WILDCAT LOC SWNW LEGACY OIL & GAS ND, INC. LEGACY ETAL BLISS 5-10H 1-H WILDCAT DRL NWNW LEGACY OIL & GAS ND, INC. LEGACY ETAL EMERY NORM 4-19H 1-H WILDCAT DRL SWSW LEGACY OIL & GAS ND, INC. LEGACY ETAL BLISS 13-10H 1-H WILDCAT LOC NWNW LEGACY OIL & GAS ND, INC. LEGACY ETAL BERNSTEIN 4-18H 1-H WILDCAT LOC NENE LEGACY OIL & GAS ND, INC. LEGACY ET AL BERGE 1-12H WILDCAT

15 Cap and trade proposals in congress could reduce activity an estimated 35-40% Current administration budget contains tax rule changes that could reduce activity an estimated 35-50% EPA regulation of hydraulic fracturing could halt drilling activity for months production decline of 25-30% Oil price below $50 WTI could reduce activity an estimated 25-30% The future looks promising for sustained Bakken/Three Forks development Federal minor source air permits require 6-12 months for approval

16 SUMMARY OF PROPOSED 2012 RULES NDAC RULES PROPOSED CHANGE GENERAL RULES Enforcement of Laws and Rules Bonds Move language to (Safety Regulation) Increase $20,000 bond to $50,000 Commercial SWD bond increased from $20,000 bond to $50,000 Eliminates $50, well blanket bond Permit to Drill Consider csg imbrittlement due to H 2 S when considering recompletions Recovery of a Risk Penalty Clarify that "approximate" well loc is to be included in the invitation to participate Requires the drilling or spacing unit be included in the invitation to participate Drilling Units Site Construction Allows temporary spacing order effective for up to 3 yrs, not 1-1/2 yrs Amends rule to address only initial well site construction Soil stabilization additives and materials require approval from Director Must reduce size of well site after completion if not used f/well operations Fencing, Screening, and Netting of Pits Amended to also address "drilling" pits which were newly created Disposal of Waste Material Requires all waste material from undesirable events to be immediately disposed Earthen Pits and Open Receptacles Requires flare pits to be at least 150 feet from wells and tanks Allows lined fresh wtr pit for frack water f/1yr in cut w/only drinking wtr chemicals Creates new section addressing pits allowing cuttings, but no fluids Drilling Pits Must reclaim pit w/in 30 days after drilling well; Director may grant exceptions Allows small lined pit f/trench water and rig wash, but reclaim before MORT Must dike pit to keep surface water from entering Creates new section allowing reserve pits only for wells < 5000' deep or SWD Reserve Pits Must reclaim pit w/in one yr after completing well Casing, Tubing, and Cementing Must slope surface to promote surface drainage away from reclaimed area Requires remedial work f/inadequate sur csg job to be approved by Director Requires surface casing pressure test after cementing Deviation Tests and Directional Surveys Requires directional surveys to be in reference to true north Creates new section addressing hydraulic fracture stimulation Hydraulic Fracture Stimulation Must use popoff valves, rupture disk, remote valve Use frack string: no chem disclosure if > 350psi on annulus after frack Safety Regulation Frack down csg: run csg evaluation f/thickness of csg and cmt w/chem disclosure Incorporated language removed from on well shut in f/public safety Requires automatic shut-down equip if well is threat to public health or safety Prohibits injection equipment from being installed < 500' from occupied dwelling Leak and Spill Cleanup Creates new section and incorporates language from &53 Requires operators to respond w/appropriate resources to contain & clean up spills Well Log, Completion and Workover Reports Run CBL prior to completion File two digital copies of logs, instead of one digital and one paper Reclamation of Surface Creates new section to address final restoration after well is plugged No additional requirements: Language taken from Oil Spills, Prod Equip, Dikes, and Seals Amend rule--move spill reference to Must remove "unused" equip rather than "unusable" Treating Plant Saltwater Handling Facilities Investigative Powers Increases minimum bond from $20,000 to $50,000 for treating plants Amend rule--move spill reference to Requires oil recovered from saltwater handling facilities to be reported to Director Must remove "unused" equip rather than "unusable" Director can timely (instead of "immediately") reply to a complaint Allows Director to decline to investigate--can appeal to IC Abandonment of Wells-Suspension of Drilling Abandonment will now include water source wells and stratigraphic tests Special Procedures Administrative Hearings Allows applications for additional wells on a spacing unit without live testimony Comments and objections to hearings must be rec'd prior business day by 5pm Official Notice Comments and objections to hearings must be rec'd prior business day by 5pm GEOPHYSICAL EXPLORATION REQUIREMENTS Notification of Work Performed Director may require progress reports prior to completion of a project

17 Hydraulic Fracture Stimulation Creates new section addressing hydraulic fracture stimulation Must use popoff valves, rupture disk, remote valve Use frack string: no chem disclosure if > 350psi on annulus after frack Frack down csg: run csg evaluation f/thickness of csg and cmt w/chem disclosure

18 TYPICAL HORIZONTAL OIL WELL Potable Waters Packer 4.5 Frack String Cement Run in hole with: 4.5 liner swell packers sliding sleeves 4.5 frack string 5 th layer of protection 4.5 liner Upper Bakken Shale Middle Bakken Lower Bakken Shale

19 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

20

21

22

23 Drilling Pits Reserve Pits Creates new section addressing pits allowing cuttings, but no fluids Must reclaim pit w/in 30 days after drilling well; Director may grant exceptions Allows small lined pit f/trench water and rig wash, but reclaim before MORT Must dike pit to keep surface water from entering Creates new section allowing reserve pits only for wells < 5000' deep or SWD Must reclaim pit w/in one yr after completing well Must slope surface to promote surface drainage away from reclaimed area

24

25

26

27 Safety Regulation Incorporated language removed from on well shut in f/public safety Requires automatic shut-down equip if well is threat to public health or safety Prohibits injection equipment from being installed < 500' from occupied dwelling

28

29

30

31 Bonds Increase $20,000 bond to $50,000 Commercial SWD bond increased from $20,000 bond to $50,000 Eliminates $50, well blanket bond

32

33

34 Vern Whitten Photography

35

36