April 3, 2013

Doing more with less

By Kate Ruggles
Farmer Staff Writer

Rigs, among other things, have always been a good measuring tool for oil activity. However, recent low rig counts in combination with record production numbers have shown that rig counts do not account for as much as they used to.
“Rig counts are a good measure for tracking oil activity in the state or we wouldn’t keep track of them,” states Alison Ritter, media representative for the North Dakota Industrial Commission. “Rig counts drive well counts, which drives production.”
But according to the Industrial Commission, around October of last year, the number of rigs operating in the state of North Dakota began decreasing, while production numbers continued to rise and set consecutive production numbers each month through December.
“Rig counts have been hovering around 180, but production is increasing which tells us that the oil companies are able to do more with less,” states Ritter. “And when rigs start getting more efficient, we don’t need as many.”
Not only are rigs becoming more efficient, but according to Whiting Oil & Gas Corporation superintendent Blaine Hoffmann, new technology is constantly improving shale oil production in the Bakken, which also creates less of a need for an increased amount of drilling rigs.
“People are drilling more pad wells,” states Hoffmann. “And well pads require less rigs, as well as save time, effort and money.”
A drilling pad is a location which houses the wellheads for a number of horizontally-drilled wells.
According to Hoffmann, the benefit of drilling pads is that operators can drill multiple wells in a shorter time because they are concentrating on one location rather than drilling one well, and moving to another location to drill another. And for this reason, drilling pads are also more environmentally sound.
In addition, Hoffmann states that new technology is coming online that is making it possible to drill out past two miles. That, plus advances in proppants, or the type of sand used for fracking, and the type of fluid used, has improved the quality of fracking as well as helped to make fracking more efficient. And according to Hoffmann, a more efficient frack is always desirable.
“There is always a push to drill the wells as economically as possible,” states Hoffmann. “But there is a balance. You still have to spend money to get the quality fracks.”
Hoffmann also brings another point with regard to the number of rigs. He states that companies are catching up on their lease holdings, which is reducing the pressure they have been feeling to drill on a lease site before it expires, thus allowing for more multi-pad drilling and a reduced need for drilling rigs.
So where does the actual number of drilling rigs factor into the measure of oil activity in North Dakota? According to Ritter, rig count numbers are still an important tool for tracking oil production.
“We still need to keep track of the rig counts, but we also pay close attention to the number of wells that come online each month,” states Ritter. “The big number people look at is the average daily production number, but we can’t get there without drilling new wells, and we can’t get there without rigs.”
Ritter states that in December 2012, the rig count was 183, but there were 292 new wells spud, which means a hole was drilled in the ground.
Though it may not feel like it because of the lower rig count, Hoffmann states that production is up and the production numbers are constantly being pushed and increase with each passing month.
“It seems like a slight disconnect,” states Ritter, on the fewer number of oil rigs operating in the state. “But we do know that right now more is happening with less.”