| NEW YORK, April 2
NEW YORK, April 2 New efficient drilling
practices may drive breakeven rates in the best areas of the
Bakken shale oil play as low as $58 per barrel, Wood Mackenzie
said on Tuesday, far lower than the traditional $70 per barrel
figure frequently touted by analysts.
The fast adoption of multi-well pad drilling, or the ability
to drill several wells from one location, should reduce the
average cost per well to $7.5 million on average in 2014,
allowing companies to make more off each barrel of oil, Wood
Mackenzie analyst Jonathan Garret said.
"The major driver of (well cost) reduction has to do with
the number of wells drilled from pads," Garret said. "You're now
drilling 3, 4, 12, even 16 wells from a single pad."
This year, more than 90 percent of wells drilled in the
Bakken will be drilled from multi-well pads, Garret said.
Multi-well pad drilling is more efficient by reducing the amount
of time it takes to drill each well as well as the equipment
Bakken breakeven prices are closely watched by the industry
because, while the development of the massive shale play has
outpaced forecasts in recent years, a lack of pipeline
infrastructure has kept Bakken oil prices relatively low.
The fear is Bakken's production growth, a force driving the
U.S. oil renaissance, will slow once local oil prices reach the
breakeven level. North Dakota is home to the largest part of the
play but it also stretches into Montana and over the border to
A Wood Mackenzie report issued on Monday estimated breakeven
costs based on sub-plays. Breakeven rates in the Sanish basin,
one of the best areas of the play, are expected to average $58
per barrel, while breakeven costs in the Nesson anticline are
forecast to be $61 per barrel.
Companies are expected to spend more than $15 billion on
drilling and completion in the Bakken and Three Forks formations
in 2014, according to the report, a figure that could mean as
many as 2,000 new wells in the region.
Continental Resources remains the largest player
there with over 1.2 million acres. In 2013, the company reported
its average costs per well were about $8 million and is
targeting costs of $7.5 million this year, which supports Wood
Smaller players are getting in on the cost benefits as well.
Oasis Petroleum, which has about half a million
acres in the Bakken, holds acreage along two typically less
fruitful areas, the Williams county perimeter and sub-play 13, a
new play just across the Montana border, which Wood Mackenzie
called the 'Montana Frontier'.
Oasis reported seeing results in these regions that are on
par with the best parts of the Bakken.
Bakken cash crude oil prices at the Clearbrook,
Minnesota, hub traded at $3.25 a barrel below U.S. futures, or
just under $96 per barrel.
(Reporting by Elizabeth Dilts; editing by Sabina Zawadzki and