Boost in the Bakken following Chevron-Hess Discussions – November 2023

Oneok executives have highlighted the ongoing boost in the Bakken gas production due to increasing natural gas-to-oil ratios.

Despite the expansion into other regions through the Magellan Midstream acquisition, there’s still ample room for growth in Oneok’s gas gathering and processing business in the Bakken.

Bakken’s gas production has consistently averaged 2.4 Bcf/d since September, reaching a record 2.6 Bcf/d in July. The broader Williston Basin has also experienced a significant uptick in gas production, rising from 1.1 Bcf/d in 2014 to 3.3 Bcf/d in 2023, driven by a gas-oil ratio increase to 2.71 as of August, possibly influenced by the Chevron deal.

Oneok’s executive team underscores the long-term growth potential of Bakken’s gas production, even if crude production stabilizes. The high-quality gas offers processing and natural gas liquids opportunities, with active efforts to expand the Elk Creek NGLs pipeline to meet rising demand.

The Bakken Shale anticipates a resurgence with Chevron’s acquisition of Hess, injecting fresh momentum into oil production and the energy sector.

Chevron’s $53 billion all-stock acquisition of Hess, with a total enterprise value of $60 billion, is set to close in the first half of 2024. This move, combined with previous acquisitions of PDC and Noble, will elevate Chevron’s total oil and gas output to approximately 3.7 million barrels per day.

Hess reported a notable increase in production, particularly in the Bakken, contributing to Chevron’s access to 465,000 net acres of high-quality resources. While the acquisition is expected to boost oil production in the Bakken, reaching pre-2020 peak levels seems unlikely. Chevron plans to adhere to existing Bakken Shale Play strategies, aiming for a production increase to 200,000 boepd by 2025.

Despite North Dakota’s position as the second-largest oil-producing state in the U.S. from 2012 to 2020, it was surpassed by New Mexico post-COVID-19.

Chevron’s CEO, Mike Wirth, emphasizes Hess’s strong acreage position, noting a substantial inventory of economically viable drilling locations that will complement Chevron’s portfolio in shale and tight resources. Chevron remains committed to leveraging technology for enhanced resource recovery and returns in the Bakken, aligning with its leading positions in the DJ and Permian Basins.

Attached below are some additional resources about the current status of operations in North Dakota.

oct nov 2023 oil and rig report north dakota

Oct/Nov 2023 Oil and Rig Report – North Dakota

$100 oil predicted after biden policy change

$100 oil predicted after Biden policy change

The Bakken Formation is located in western North Dakota, eastern Montana, and southern Saskatchewan, Canada, as a subsurface formation within the Williston Basin. The Williston Basin extends to southwestern Manitoba, east-central North Dakota, northwestern South Dakota, eastern Montana, and southern Saskatchewan.

The Bakken formation is renowned for being one of the largest oil and natural gas deposits in the United States. This significant reservoir is part of the Williston Basin, which has an estimated 7.4 billion barrels of recoverable oil using modern technology.
At 31 billion barrels, the Bakken oil field has enough reserves to produce 2 million barrels per day until around 2042. After that, there will be a gradual decline over the next 30 years. However, if we consider the total reserves of 48 billion barrels, the production rate of 2 million barrels per day can be sustained for a much longer period, until approximately 2066.
Bakken oil, also referred to as Bakken crude, is commonly known as “North Dakota Sweet” or “North Dakota Light” crude oil. This name comes from its low sulfur content, which is similar to West Texas intermediate crude, a traditional type of crude oil from West Texas.
Oil occasionally reappears in old deposits and long exhausted oil wells. The earth’s crust is layered like a sandwich cake, with solid layers and fractured-porous layers that contain various fluids, including oil.

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Greg Hillman


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