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600 East Boulevard Ave. - Dept 405Bismarck, 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
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100 years ago wells were drilled wherever they would fit (rule of capture), and were not spaced on the basis of geology and engineering as is currently done by the North Dakota Industrial Commission.
This wasted a great deal of the oil and gas.
Vern Whitten Photography
North Dakota Average Monthly Rig Count
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Rig
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Rig Count ND Sweet Oil Price
192 Rigs
Typical Bakken Well Production
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What Does Every New Bakken Well Mean to North Dakota
A typical 2010 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 more than 575,000 barrels of oil
Generates over $20 million net profit
Pays approximately $4,250,000 in taxes$1,930,000 gross production taxes$2,000,000 extraction tax$320,000 sales tax
Pays royalties of $6,900,000 to mineral owners
Pays salaries and wages of $1,550,000
Pays operating expenses of $1,900,000
Costs $6,600,000 to drill and complete
Western North Dakota
• 1,100 to 2,700 wells/year = 2,000 expected• 100-225 rigs = 12,000 – 27,000 jobs = 20,000 expected
• 15 - 30 million gallons frac water/day
• 10 to 20 years• 26,000 new wells = thousands of long term jobs
North Dakota Oil Production and Price
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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 completed
26,000+ more new wells possible in thermal mature area
P90=5 BBO – P50=7 BBO – P10=11 BBO (billion barrels of oil)
P90
P50
P10
Hydraulic Fracturing
Lifeline to Domestic Energy
• Hydraulic Fracturing• Why• How
• State Regulation• Frac fluid
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 or ceramic beads• cost > $2 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 permitting &
disposal of flowback 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• 2 - 2.5-year supply
Industrial Commission Regulation
• Hydraulic fracturing• Two casing strings required• Both strings must be cemented• Pressure tests required• Frac is > 1 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-off Point • 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-off Point
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-off Point
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
Sea Level
Oil & GasBakken/Three Forks
PrecambrianBasement
Base of fresh water
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
Salt-Water Disposal Dakota Fm.
Sea Level
300 disposal wells
450,000 barrels wtr/day
Bakken Fm.
Base of fresh water
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
Oil and gas well locations are built (stockpiling top soil and lining reserve pits) to make reclamation easier.
Drilling rigs are leased on a daily rental. A horizontal Bakken well costs approximately $1/second.
Well head
TreaterTanks
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 regulations require 6 -12 months longer for drilling and surface use approval