E&P Notes (July 2014)
Authors: Jacobs Trent , Betz Jack , Henni Abdelghani 
Published: February 2015

E&P Notes
’Williston Basin Reserves May Top 21 Billion Barrels, Peak Production in 6 to 7 Years’
More than 21 billion bbl of light, sweet crude oil will be extracted over the lifetime of the Bakken and Three Forks shale plays, according to the latest projections from energy consultancy group Wood Mackenzie. The two plays are found in the United States’ prolific Williston basin and together produce approximately 1 million BOEPD. As production rises from the deeper Three Forks formation, the firm predicts that between 2020 and 2021, production from the Bakken Shale will reach its peak.
Despite the fact that production growth is slowing in the Bakken, Wood Mackenzie said there will be commercial opportunities throughout the basin for years to come. Reductions in drilling and completion costs and increased recovery rates are driving operators to explore less-rich areas of the Bakken. “It might not have made sense in 2010 to spend (USD) 13 million on a Bakken well that is only going to get about 300,000 BOE out of the ground,” said Jonathan Garrett, an upstream analyst at Wood Mackenzie who specializes in the Williston basin. “But flash forward to today; now it might make sense to spend (USD) 6 or 7 million on a well to get 300,000 to 350,000 BOE.”
’US Offshore Regulator to Focus More on Technology’
The United States’ top offshore regulator said his agency is adopting new policies and measures to improve its working relationship with the offshore industry. To accomplish this, the director of the Bureau of Safety and Environmental Enforcement (BSEE), Brian Salerno, said that his agency will increase its focus on technology assessment. Salerno explained that traditionally, BSEE has based regulatory standards in part on industry standards but the ongoing advancements of offshore technology have presented a challenge to this model. “We still rely on that basic approach, but regulations have always had a tough time keeping up with technological change,” said Salerno, who spoke at the Offshore Technology Conference in Houston in May. “For that matter, industry standards are having a tough time keeping up as well. And that has become even more of a problem as the pace of technological innovation and change has accelerated.”
’First Transboundary GOM Leases Awarded Under New Rules’
The US Department of the Interior and the US Bureau of Ocean Energy Management have awarded ExxonMobil three offshore leases in the US-Mexico boundary area of the Gulf of Mexico, the first leases subject to the terms of the 2012 US-Mexico Transboundary Hydrocarbon Agreement.
The agreement governs reservoirs that are split by or close to the boundaries of the US and Mexico. It allows US operators and Mexican state oil company Pemex to explore transboundary reservoirs as single units, encouraging unitization - the process by which multiple leaseholders agree to extract resources through the work of a single operator. Unitization encourages the drilling of fewer wells, which increases efficiency of production and reduces waste as well as the likelihood of environmental accidents, the agencies said. In cases where a transboundary unitization agreement cannot be reached, parties can each produce as much oil that is calculated to lie on its side of the boundary.
’Saudi Aramco Progresses on Shale, Confirms Red Sea Find’
Saudi Aramco has made significant progress developing its shale gas reserves and will begin using shale gas for domestic industrial projects, the company said in its 2013 annual review.
The company said its unconventional gas program became fully operational in 2013, 2 years after it launched a program to develop unconventional gas in the frontier Northern Region, offering new resources for the country’s energy needs. Saudi Aramco is now ready to commit shale gas for the development of a 1,000-MW power plant that will feed a massive phosphate mining and manufacturing project. “Saudi Arabia will be among the first countries outside North America to use shale gas for domestic power generation,” the company said in the annual review.