"It’s tough to get a word in edgewise as U.S. producers beat their chest over their shale oil and gas finds and impending energy independence, but one analyst has managed to deflate some of the hype. Bob Brackett, an analyst at New York-based Bernstein Research, says oil wells in Montana, part of the giant Bakken shale basin, are rapidly deteriorating."


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here are other O&G articles this man has written.  What do you think of his analysis of the Balkan?

I find it hard to get a clear sense of what the article is trying to say. Example:

"Costs are going to be crucial as oil prices recede. Oil field services already moan of high costs of raw materials such as guar gum, apart from rising labour costs. While drilling costs are coming down, a rapid rise in production could see oil prices go the way of natural gas prices, which recently touched a decade low."


“While U.S. oil production will grow over the next few years with the Bakken and Eagle Ford becoming million-barrels-a-day fields, the world will not find itself awash in oil (shale or otherwise),” 

Which is it? It would seem to me that the world would have to be "awash" in oil for oil prices to go the way of natural gas prices (demand collapse would be the other usual suspect for price drops, but that is not being discussed in this article). 

What is happening in Montana may very well be interesting, and I would be curious to hear what oil companies have to say about the relative quality and decline curves of Montana shale oil wells in comparison to the rest of the Bakken, but the author really hasn't given us much to evaluate as far as I can see. We already know that fracked well decline curves for oil and gas are relatively steep. Is the decline in Montana due to wells declining faster than expected or are the wells proving to be of lower than projected quality from their start? The article does mention the Elm Coulee field, but does not really explain what may or may not be happening there. Since that field has been projected to have such large reserves, what really is going on there? Are poor quality wells causing oil companies to dial down their drilling plans there? The article seems to imply this. Are there other issues such as lack of adequate infrastructure that are holding increased development back? Were there significant weather or rig availability issues that slowed new well drilling and completion? I don't know enough about the Bakken to have any idea.

A large problem I have with the article is that it seems to be a gross summarization of someone else's analysis. I can't even guess what value the original publication might provide or whether the point of the original is even preserved. The best I can say is that this summary is muddled and may or may not indicate that the original was similarly unclear (much less whether it is fundamentally misguided). Mr. Brackett is a financial analyst so I have to wonder how good his understanding is in this area.

From the data I've seen on Eagleford and Bakken decline rates I tend to agree with the article.

In the big picture whats the average oil well in the united states produce? Not much. We have a bunch of stipper wells out there already, so that's no surprise. There is a big difference between a productive sand and a productive shale. That fact that we have to go after shale as an energy resource tells me that energy independence is a pipe dream if we ever get back to growing our economy. That may be a pipe dream too!

Think about is this way North Dakota has around 200 rigs working in order to get to where they are now. In a big conventional play with modern rigs you could have used much less. Oxy is not stupid, and they probably aren't trying to book reserves on paper in order to satisfy shareholders. They are looking for real longterm growth and they don't see it in shale without a massive investment.

In saying all of that, I believe that with less abundant conventional oil and gas found in the world shale will be a big player, but it won't be cheap. If the world gets it economic legs to stop wobbling and energy demand increases get ready!

The basics of Montana is this

Infrastructure is poor for moving oil

the rock in ND is somewhat better quality

Much of the good stuff is HBP

operators drilling new wells are HBPing edge areas.  


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