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NORTH DAKOTA DEPARTMENT OF MINERAL RESOURCES: OIL & GAS UPDATE July 2018 | NDPC CookFest 1 Visit Us: www.dmr.nd.gov
NORTH DAKOTA DEPARTMENT OF MINERAL RESOURCES:
OIL & GAS UPDATE July 2018 | NDPC CookFest
1
Visit Us: www.dmr.nd.gov
PRODUCTION GAS CAPTURE SPILL REPORTING ROYALTY STATEMENTS ORDINARY HIGH WATER MARK SURVEY Raising the bar in 2018
2
0
0.5
1
1.5
2
2.5
0
50
100
150
200
250
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Rig
s
North Dakota Average Monthly Rig Count
Rig Count
3
Record High: 218 Rigs May 2012
Current: 67 Rigs July 2018
4
0
0.5
1
1.5
2
2.5
0
50
100
150
200
250
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
North Dakota Average Monthly Rig Count
Rig Count ND Sweet Oil Price Spuds / Month / Rig
.92 Spuds/Month/
Rig May 2012
1.70 Spuds/ Month/
Rig May 2018
5
Rigs
Wells
6
Active Conventional Bakken/Three Forks
14,755 1,959 12,796
Inactive +$55 for 90 days 12/20/17
1,569
Waiting on Completion +$55 for 90 days 02/03/18
955
Permitted +$60 for 90 days NYMEX April 2018
1,878
Increase Density Approved 07/06/18
13,084
Total 32,241 Estimated Final 55,000-65,000
Rig & Well Counts
7
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
North Dakota Wells Producing
16,762 Wells Capable of Producing
May 2018
14,755 Wells Producing
May 2018
$0
$15
$30
$45
$60
$75
$90
$105
$120
$135
$150
$165
$180
$195
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
1,300,000
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
ND
Sw
eet $
/BO
BO
PD
North Dakota Daily Oil Produced and Price
BOPD $/BO
Oil & Gas Production
8
All-time high 1,244,629
barrels/day May 2018
Oil & Gas Production
9
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
55,000,000
60,000,000
65,000,000
70,000,000
1985 1990 1995 2000 2005 2010 2015 2020$0
$2
$4
$6
$8
$10
$12
$14
MC
F
$/M
CF
North Dakota Monthly Gas Produced and Price
$ perMCF MCF GAS PRODUCED
All-time high 71,881,378 MCF
2,318,754 MCF/day May 2018
Enhanced Oil Recovery (EOR)
• Injection of fluids or gasses into reservoir to “push” the additional oil and/or natural gas that was difficult or did not initially product to surrounding wells.
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Enhanced Oil Recovery (EOR)1
• EOG is the 1st company to say it has significantly increased oil production from an unconventional play using gas injection.
• Field tests since program started in 2013:
• The production increases on 15 wells indicated from 30-70% reserve gains.
• A 32-well test in 2016 added 300,000 bbl of oil at $6/bbl finding cost.
• Work is ongoing on 100 wells in six areas in 2017.
1 Source: EOG
Enhanced Oil Recovery (EOR)1
Inputs and Outputs
• Additional capital costs average about $1 million per well
• The process uses associated gas from its wells
• Production response is in 2-3 months
• $1 invested adds $2 to net present value
It Works if:
• The formation is able to contain high-pressure gas injection near the well.
• Wellbores contact the most productive rock.
• The completion maximizes the fractured area within a restricted zone around the wellbore.
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1 Source: EOG
PRODUCTION GAS CAPTURE SPILL REPORTING ROYALTY STATEMENTS ORDINARY HIGH WATER MARK SURVEY Raising the bar in 2018
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Gas Performance
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Reference: JJ Kringstad – North Dakota Pipeline Authority
Gas Production Forecast
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Reference: JJ Kringstad – North Dakota Pipeline Authority
74% Oct 2014-Dec
2014
77% Jan 2015-
March 2016
80% April 2016-Oct 2016
85% Nov 2016-Oct 2018
88% Nov 2018-Oct 2020
91% Nov 2020
Gas Capture Policy
21
Non-confidential Bakken/Three Forks/Sanish Only (Wells Flaring 10+ mcfd) © OpenStreetMap contributors
Visit Us: www.dmr.nd.gov
NDIC Order 24665 Policy Goals
• Reduce flared volume of gas
• Reduce number of wells flaring
• Reduce the duration of flaring from wells
Gas Capture Policy NDIC Order 24665
Policy Goals
• Reduce flared volume of gas
• Reduce number of wells flaring
• Reduce the duration of flaring from wells
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Current Goal 85% Captured
Visit Us: www.dmr.nd.gov
74% Oct 2014-Dec
2014
77% Jan 2015-
March 2016
80% April 2016-Oct 2016
85% Nov 2016-Oct 2018
88% Nov 2018-Oct 2020
91% Nov 2020
Gas Capture Policy NDIC Order 24665
Policy Goals
• Reduce flared volume of gas
• Reduce number of wells flaring
• Reduce the duration of flaring from wells
23
Visit Us: www.dmr.nd.gov
74% Oct 2014-Dec
2014
77% Jan 2015-
March 2016
80% April 2016-Oct 2016
85% Nov 2016-Oct 2018
88% Nov 2018-Oct 2020
91% Nov 2020
Gas Capture Policy NDIC Order 24665
Policy Goals
• Reduce flared volume of gas
• Reduce number of wells flaring
• Reduce the duration of flaring from wells
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Visit Us: www.dmr.nd.gov
74% Oct 2014-Dec
2014
77% Jan 2015-
March 2016
80% April 2016-Oct 2016
85% Nov 2016-Oct 2018
88% Nov 2018-Oct 2020
91% Nov 2020
Gas Capture Policy
25
Visit Us: www.dmr.nd.gov
74% Oct 2014-Dec
2014
77% Jan 2015-
March 2016
80% April 2016-Oct 2016
85% Nov 2016-Oct 2018
88% Nov 2018-Oct 2020
91% Nov 2020
• New Gas Processing Infrastructure: • Oasis, Liberty Midstream,
and Targa/Hess capacity to come in 2018
• Production Restrictions: • 200bbls/day meeting at least
60% capture • 100 bbls/day restrictions on
all other wells
What’s Next?
Gas Processing Plants
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PRODUCTION GAS CAPTURE SPILL REPORTING ROYALTY STATEMENTS ORDINARY HIGH WATER MARK SURVEY Raising the bar in 2018
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Unified Spill Reporting Current Process • Multiple places
to submit forms • Confusion
among operators and public
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Incident
DEQ
DMR DES
Unified Spill Reporting Improvement Goals • One stop
location for reporting
• Information
sharing between agencies & databases
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Incident
DES
DMR DEQ
PRODUCTION GAS CAPTURE SPILL REPORTING ROYALTY STATEMENTS ORDINARY HIGH WATER MARK SURVEY Raising the bar in 2018
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Royalty Statements North Dakota Administrative Code: 43-02-06-01 Royalty Owner Information Statement • Price: Addition of natural gas liquids to the price breakdown.
• Deductions & Adjustments: Will be broken into two sections
• Adjustments: The amount and purpose of each adjustment or correction made
• Deductions: The amount and purpose of each deduction separated into four categories:
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Changes effective:
July 1, 2019 • DMR completing compliance
reviews – at this time none meeting impending
requirement.
Transportation Processing Compression Administrative Costs
Royalty Statements North Dakota Administrative Code: 43-02-06-01.1 Ownership Interest Information Statement • Operator or payor shall provide the mineral owner with a statement
identifying: • Spacing unit for the well (AND the effective date of the spacing unit change if
applicable); • the net mineral acres owned by the mineral owner; • the gross mineral acres in the spacing unit; and • the mineral owner’s decimal interest that will be applied to the well.
• Statement will be sent within 120 days after the end of the month of the first sale of production from a well OR change in the spacing unit of a well.
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Changes effective:
July 1, 2019
PRODUCTION GAS CAPTURE SPILL REPORTING ROYALTY STATEMENTS ORDINARY HIGH WATER MARK SURVEY Raising the bar in 2018
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OHWM Survey | Timeline
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April 21, 2017 • Legislature
passes & Governor signs Senate Bill 2134
April 17, 2017 • Wenck study
Ordinary High Water Mark of the Missouri River Bed Review released
June 20, 2018 • Written public
comment period closed
June 26, 2018 • Public hearing
OHWM Survey | Public Input • 1,435 pages of written
comments submitted by 26 entities.
• 11 representatives commented during the public hearing.
• …recommendation for calculating the acreages that are above and below the ordinary high water mark.
• …clarification of ownership of islands formed on the bed of the Missouri River after statehood.
• …redefining land labeled “flooded land” which was once used for ranching operations
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OHWM Survey | Next Steps
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Department of Mineral Resources and Wenck review comments and
develop final recommendation to
Industrial Commission.
Industrial Commission to adopt or modify recommendations.
Industrial Commission’s findings
to determine the delineation of the
ordinary high water mark for the segment
of river addressed.
NORTH DAKOTA DEPARTMENT OF MINERAL RESOURCES
CONTACT US 600 East Boulevard Ave. – Dept. 405
Bismarck, ND 58505
Phone: 701.328.8020
Email: [email protected]
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www.dmr.nd.gov
