The oil and gas production landscape in North America has seen a paradigm shift since the collapse in oil prices in 2014. Although prices remain challenging, several operators have managed to sustain the relatively long period of low margins through some aggressive approaches. This paper inspects changes in operating strategies and field development plans across all oil-rich basins in the US Rocky Mountain fields and how operators have used a combination of low oilfield service prices, high-graded well locations, and incremental fluid/proppant volumes to increase production.
The paper investigates the transformation in operating philosophies since 2014 in four oil-rich basins in the Rocky Mountain region—Williston, Denver-Julesburg (DJ), Uinta, and Powder River. The Bakken formation in the Williston basin represents one of the best-quality rocks in all of North America. However, high oil-price differentials and well costs have made it difficult for drilling to remain profitable. The core of the DJ basin (Wattenberg) has one of the lowest break-even prices in the region, and rig count continues to increase as operators start seeing signs of recovery in the market. The Uinta basin, although relatively small in size, has shown tremendous return potential in the form of multiple stacked pays and promising production results. The Powder River basin poses one of the toughest operational environments in the region owing to wildlife stipulations, harsh weather, and deeper targets.
High-graded well locations in the Bakken are limited to few fields, which limits the scope of expansion in the current oil price environment. The DJ basin is challenged with high-density well spacing; estimated ultimate recovery (EUR) per drilling spacing unit (DSU) continues to increase, but EUR per well has gone down by as much as 60%. In the Uinta basin, formations never known to be continuous in the Green River group have shown significant return potential. The Powder River basin has recently attracted large investments from major independent operators as they tackle drilling challenges associated with abrasive rocks and testing optimum lateral landing points.
Case studies show how operating strategies have changed with changes in oil prices. The Bakken and DJ basins are relatively mature, and as drilled-but-uncompleted (DUC) inventory continues to increase, depletion from existing wells and interference between fractures is impacting production from new wells. The Powder River basin is still in the exploratory phase, and operators are still working on reducing well-costs, optimizing fracturing-fluid/proppant volumes, and examining productivity of other target rocks. The Uinta basin is in the early phases of expansion, with many of the fields still being explored for scalability. Changes in production maps and completion trends provide a comprehensive understanding of how these variables have impacted oil output from the region since 2012.