Archive for March 2015
This post is an update on LTO extraction in Bakken based upon published data from the North Dakota Industrial Commission (NDIC) as per January 2015.
This post also presents a closer look at developments in LTO extracted from the three of the four counties that presently dominates LTO extraction; McKenzie, Mountrail and Williams.
With an oil price below $50/Bbl (WTI) the companies involved in extraction of LTO in Bakken faces two financial challenges;
- The decline in the cash flow from operations reduces funding capacities for manufacturing new wells. A lower oil price also lowers the value of the companies’ assets and borrowing capacities.
- The “average” well with around 90 kb [90,000 Bbls] of flow in its first year is estimated to have an undiscounted point forward break even (that is a nominal break even with 0% return for the well) at around $65/Bbl (WTI). The break even price increases with increases in the return requirement.
From December 2014 to January 2015 LTO extraction from Bakken(ND) declined from 1.16 Mb/d to 1.13 Mb/d.
In short, LTO extraction at present prices ($45/Bbl, WTI) makes little commercial sense!
In this post I present actual Norwegian crude oil extraction and status on the development in discoveries and reserves and what this has now resulted in for expectations for future Norwegian crude oil extraction.
This post is also an update of an earlier post about Norwegian crude oil reserves and production per 2013.
Norwegian crude oil extraction peaked in 2001 at 3.12 Million barrels per day (Mb/d) and in 2014 it was 1.52 Mb/d.
The Norwegian Petroleum Directorate’s (NPD) recent forecast expects crude oil extraction from the Norwegian Continental Shelf (NCS) will become around 1.49 Mb/d in 2015.“Sanctioned Developments” in Figure 01 represents the total contributions from 8 sanctioned developments of discoveries now scheduled to start to flow between 2015 and 2017.
My forecast for 2015 is 1.47 Mb/d with crude oil from the NCS.
My forecast shown in figure 01 includes all sanctioned developments and not discoveries (refer also figure 07) and contingent resources in the fields. The forecast is subject to revisions as the reserve base becomes revised (as discoveries pass the commercial hurdles) which likely will fatten the tail post 2020 of the presented forecast.
My forecast assumes some reserve growth, but does not include the effects from fields/discoveries being plugged and abandoned as these reach the end of their economic life.
Discoveries sanctioned for development and Johan Sverdrup (with an expected start up late 2019) is expected to slow down the decline in Norwegian crude oil extraction.