VOLUME VI ISSUE III NOVEMBER 2012

Oil&GasTIDBITSWe Keep North Dakota Going Strong

N O R T H D A K O T A

C O U N C I LPETROLEUM

T r a n s i t i o n i n g f r o m e x p l o r a t i o n t o d e v e l o p m e n tAs companies develop existing leases, ND can expect long-term growth, opportunity

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Oil development in the Bakken may have come on as a boom at the start, but in recent months that boom has been evolving into a more controlled, steady hum. This change of pace and the decline of drilling rigs operating in the state has led some to speculate that production in the Bakken has reached its peak, but industry experts and production levels indicate production continues to set record highs with no signs of stopping any time soon. This is thanks to new strides in efficiency and technology.

The rapid pace of activity that has dominated the Bakken over the past six years was considered the exploration phase. Many companies worked around the clock to drill leasehold properties before leases expired within a three to five-year window. Now that these leases are held, companies have moved to the development phase where they are coming back and infill drillingor deploying technologies like walking rigs, multi-well pads and horizontal drillingto further develop their best producing fields to maximize output and efficiency.

According to Ron Ness, president of the North Dakota Petroleum Council, the development phase allows companies to now take a more structured and patient approach to developing existing leases and allow infrastructure to catch up. Through the use of horizontal drilling and walking rigs, or rigs that are able to move on tracks from one well to the next, companies are drilling four or more wells on each pad placed on a 1280 acre spacing unit (two square miles) to produce as much oil as traditional drilling with less impact on the land. Because fewer trucks and rig fleets are also needed to move and assemble equipment on several separate well pads, multi-well pads and horizontal drilling are also helping reduce the impact to roads and infrastructure.

Furthermore, the reduction in time it takes to set up, take down and move equipment from one pad to another also means companies are drilling more wells with fewer rigs and less time, money and resources. In fact, the state of

North Dakota was able to surpass the state of California in oil production earlier this year with 10 percent or less of the well count. At that time, North Dakota had just more than 6,000 wells compared to California with more than 60,000 wells.

With the development phase now taking hold in the Bakken, what is next? Ness says residents can expect the state and communities to begin catching up on infrastructure improvements and construction of more affordable housing. Drilling to enhance the highest producing fields and areas will continue, but for each well that is developed and begins producing, permanent full-time staff will be needed to monitor, maintain, repair and service that well.

Each well in the Bakken is expected to produce for 20 to 30 years, said Ness. We now have more than 7,700 wells producing in the state and expect to have more than 30,000 developed throughout the Bakken before all is said and done. That translates into thousands of long-term jobs and other service and manufacturing opportunities for rural North Dakota for many years to come.

With leases now held, many companies are infill drilling, or drilling multiple wells on each wellpad. Photo by Renae Mitchell.

North Dakota Petroleum Council

PO Box 1395

Bismarck, ND 58502-1395

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North Dakota Petroleum CouncilWe Keep North Dakota Going Strong

phone: 701.223.6380fax: 701.222.0006

e-mail: ndpc@ndoil.org

120 North 3rd Street, Suite 200 PO Box 1395

Bismarck, ND 58502-1395

E n e r g y C o r r i d o r sIn the early stages of development, it seemed as though

drilling rigs were popping up nearly everywhere across the landscape and horizon. An aerial view of the Bakken, however, shows a different picture of well sites carefully planned and plotted to reduce impact on our land and roads and infrastructure.

Upon the recommendations of the North Dakota Department of Mineral Resources, producers have worked to place well pads along existing roads or section lines when available. In most areas a 1,280 acre (2 sections or 2 square miles) spacing unit is used. With horizontal drilling,

development of this spacing unit can be accomplished with one well pad, where as traditional vertical drilling might have meant at least one well pad per quarter. In addition, thanks to horizontal drilling, producers have the flexibility to place a well pad with consideration to landowners wishes or even wildlife habitats to prevent disturbing important breeding grounds.

The next energy corridor would be placed four miles in either direction, leaving essentially four square miles undisturbed between corridors that can continue to be used for agriculture or recreation or by sporting groups.

Wells are sited along energy corridors, or existing section lines, to help reduce impact to land and roads. (Vern Whitten Photography)

Horizontal drilling (right) allows companies to develop the same number of acres as conventional vertical drilling (left) with less surface impact.