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NOVEMBER 2012 • OIL & GAS INQUIRER
While booming oil production coming out of North Dakota drives all the headlines, behind the scenes there is an emerging story about natural gas production taking shape. And that growing gas production could have a major effect on Canadian producers, according to a report by Bentek Energy. The report, entitled The Williston Basin: Greasing the Gears for Growth in North Dakota, says North Dakota’s gas production has grown from around 150 million cubic feet per day to 536 million cubic feet per day in the last decade. It predicts it could grow to 3.1 billion cubic feet per day by 2025. Bentek says the only thing holding back Bakken gas production is a lack of gas gathering and processing facilities. Once put in place, there is some spare take-away capacity to market the gas in the U.S. Midwest. And, given the proximity of the Bakken to markets, it could also replace Canadian gas exports. Given that the gas is a by-product of oil drilling, Bentek says the Bakken has great advantages over competing gas basins. It estimates the typical Bakken well is earning an internal rate of return of 58 per cent, based on gas prices of $2.45–$2.86 per million British thermal units and West Texas Intermediate prices of $84–$100 per barrel. Canadian gas exports to the United States have declined by 40 per cent since the market crash in 2008. Bentek expects this trend to continue, falling from 5.7 billion cubic feet per day last year to 3.2 billion cubic feet in 2017. Bentek says the decline in Canadian exports will create pipeline capacity for Bakken gas.
QEP Resources Inc. is also building a Bakken land base. Earlier this year it spent $1.38 billion acquiring acreage from a number of operators to grow its North Dakota operations. The transaction will raise QEP’s net acreage in the Williston Basin to about 118,000 acres. “We expect the growth potential of these assets to have a significant impact on our overall production and, more specifically, on our crude oil production,” QEP president and chief executive officer Chuck Stanley said. The properties, located in Williams and McKenzie counties, have an aggregate net proved-plus-probable reserves of about 125 million barrrels of oil equivalent.