Brigham's New Bakken Well Flows -- But So What?

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The Company: Brigham Exploration Company, an exploration and production company with an operational focus in the Rocky Mountains, the Gulf Coast and the Anadarko Basin.
The Filing: Form 8-K filed with the SEC on July 16, 2008.
The Finding: Energy watchers buzzed over the announcement that Brigham completed its Mrachek 15-22 1H well, located west of the Nesson Anticline in North Dakota, at an early flowing production rate of approximately 727 barrels of oil equivalent per day. Contrary to expectations, given the highly variable nature of the Bakken Shale Formation reservoirs stretching across North Dakota and Montana, it is unlikely that aggregate Bakken production will exceed more than three times the current rate of 1,276 barrels equivalent per day in North Dakota.

The Upshot: The U.S. averages 10.12 million barrels per day of oil imports, according to the EIA. The Bakken shale, while large by U.S. onshore field standards, will have only a minor effect on U.S. production or imports. Given the expense and complexity of drilling in the Bakken Formation and other shale plays, energy policymakers are delusional if they believe that throwing exploration and drilling monies at the Bakken Formation and other shale plays will materially reduce our dependence on foreign fossil fuels.

Despite advances in technology, the peaking of per-well production occurred more than 50 years ago. State and industry officials report that North Dakota’s oil wells pumped 4.85 million barrel of oil equivalents in May, much of it from the Bakken Formation. The 3,797 active wells pumped 41 barrels per day.

To put this in perspective, two of the largest oil fields in the world, Ghawar (Saudi Arabia) and Cantarell (off Mexico’s shore), are still producing more than 5.0 million and 1.8 million barrels per day, respectively.

Production will go on for decades in the Bakken, but thousands and thousands of wells will be required to extend the play over those years.

The Question: Is how much oil will eventually be recovered from the Bakken more relevant than when the oil will be recovered?

Tags: Brigham Exploration Co., Oil, Barrel, North Dakota, Brigham, David Phillips

After more than 25 years as an equity analyst and forensic accounting expert, David Phillips now combs through SEC filings for juicy tidbits. He also blogs regularly at the 10Q Detective.