Synopsis

Signs of a bottom? The rate of change for Bakken Shale well stimulation pricing is shrinking while the market appears to be approaching balance between demand for equipment and supply.

Average pricing per stage fell to $27,250 vs. $29,440 in February 2016, according to Hart Energy’s Heard in the Field survey. Survey participants cited a further reduction in regional hydraulic horsepower (hhp) to 232,000 vs. 300,000 hhp 90 days ago.

Crew count has fallen to nine vs. an estimated 10 to 12 in February. Survey respondents say the average fracture stimulation job requires 23,000 hhp on a 10,000-foot lateral with an average 46 stages.

Service providers say demand for well stimulation services will increase in tandem with commodity prices. Operators need $57 oil to increase activity, according to survey respondents, although efforts to capture acreage is sustaining some drilling programs.

Views are mixed on the volume of drilled but uncompleted wells (DUCs) with half of respondents to the survey saying DUCs have increased by 10% to 15% over the last 90 days while the other half say DUC volume is unchanged.

The North Dakota Industrial Commission reported an incremental increase in DUCs for the month of March. Service providers estimate the effort to reduce DUC backlog will take “months” once recovery begins.

Currently, well stimulation crews are completing wells in seven to nine days. Moving to batch completions can shave a day off that cycle.

Watch for the next Heard In The Field report on the Bakken well stimulation market in August 2016.

Part I. – Survey Findings

Among Survey Participants:

  • Demand Flat Quarter-To-Quarter
    [See Question 1 on Statistical Review]
    ​All eight respondents reported demand has remained low, but steady during second-quarter 2016 compared with the first quarter with no anticipation of an improvement until the price of oil increases.
    • Mid-Tier Service Provider: “There are so few active fleets now, that demand is fairly balanced with supply and has stabilized.”

 

  • DUCs Continue To Increase
    [See Question 2 on Statistical Review]
    ​Half of respondents reported the number of DUCs have increased during the past three months by 10% to 15%; the other half said they were the same as the prior three-month period. Operators continue to drill at reduced levels but wait to complete wells.
    • Top-Tier Service Provider: “Several of the remaining active operators continue to drill to hold acreage, but are waiting to complete wells. When the recovery starts, it will take many months just to frack the backlog.”

 

  • Higher Oil, Gas Prices Needed To Lower DUC Backlog
    [See Question 3 on Statistical Review]
    ​Among respondents, an average oil price of $57 and average natural gas price of $3.25 would be required for fracking demand to increase. Operators would begin fracking uncompleted wells and start exploratory drilling again.
    • Mid-Tier Service Provider: “There are so many uncompleted wells that even when recovery starts there won’t be a need to increase drilling until we work through the backlog.”

 

  • Estimated Time To Complete DUC: ~7.5 Days
    [See Question 4a and 4b on Statistical Review]
    ​Among respondents, the average time to complete a DUC is about 7.5 days in the Bakken. Utilizing a multiwell zipper frack approach to completions can possibly reduce the time per well by up to one day per well on a pad.
    • Mid-Tier Service Provider: “We are completing these DUC wells in seven to nine days. If we do multi-well zipper fracks, it can save up to one day per well.”

 

  • Hydraulic Horsepower Slightly Down Quarter-To-Quarter
    [See Question 5 and 6 on Statistical Review]
    Average estimated hydraulic horsepower in the region now stands at about 232,000 hhp, down somewhat from the roughly 300,000 hhp reported in February. In addition, respondents estimated there were about nine frack crews left in the Bakken, down from 10 to 12 estimated in February.

 

  • Bakken Well Metrics: Vertical Depth Averages 9,875 Feet, Laterals 10,000 Feet
    [See Question 7 on Statistical Review]
    Average vertical depth reported is 9,875 feet across the play. Average lateral length is 10,000 feet. Average number of stages is 46. Injection rates average 73 barrels per minute with about seven stages completed daily on a 24-hour schedule. Average hhp required to frack a Bakken well is estimated at 23,000 hhp.

 

  • Average Cost Per Stage: ~$27,250
    [See Question 8 and 9 on the Statistical Review]
    ​The average per stage price is estimated at $27,250, down from $29,438 reported in February. Pricing is expected to remain flat during the next three months.
    • Mid-Tier Service Provider: “Prices should remain flat until we see signs of recovery. With increased demand, prices will rise quickly and there will be a waiting line for frack dates.”

                                                                     End Survey Findings

Survey Demographics

H A R T E N E R G Y researchers completed interviews with eight industry participants in the well stimulation/pressure pumping service segment in the Bakken shale play. Participants included five managers or sales personnel with well service companies, one frack equipment supplier, and two completions managers or consultants working for E&P companies. Interviews were conducted during early to mid-May 2016.

Part II. – Statistical Review

Well Stimulation/Pressure Pumping

[Bakken Shale]

Total Respondents = 8

[Fracking service providers = 5, Frack equipment suppliers = 1, Operators = 2]

1. Do you expect demand for pressure pumping equipment to grow, remain the same or shrink in second-quarter 2016 compared to the first quarter?

Remain the same:

8


2. Are the number of DUCs increasing, decreasing or remaining the same compared with three months ago?

Remain the same:

4

Increasing by 10% to 15%:

4


3. What oil price (per barrel) and what natural gas price (per thousand cubic foot) is needed for demand for fracking services to improve?

Oil

Price

# of
responses

Gas

Price

# of
responses

$50-$55

2

$3-$3.50

6

$56-$60

6

$3.50-$4

2

Average $57

Average $3.25


4a. On average in this formation, how long does it take to bring a DUC online?

7-8 days:

8

Average:

7.5 days


4b. Does the time to bring a DUC online differ between wells drilled on a pad vs. a single well?

Yes, but no time estimate given:

6

Yes, up to one day saved per well:

2


5. In your estimation, what is the total hhp in your area?

200,000 hhp:

2

201,000-250,000 hhp:

6

Average:

~232,000 hhp


6. How many total crews (spreads) do you estimate are active in the area?

7-8:

2

9-10:

6

Average:

~9 crews


7. What is the average vertical drilling depth, average horizontal lateral length, number of frack stages and injection rates (barrels per minute) in this play? What are the average frack stages per day? Is this a 12-hour or 24-hour shift?

Average vertical depth:

9,875 feet

Average horizontal lateral length:

10,000 feet

Average number of frack stages:

46

Injection rates (barrels per minute):

73

Average number of frack stages per day:

7

12-hourr or 24-hour:

24-hour

How much hhp required to frack a well?

~23,000 hhp


8. What is the average cost per stage in your area now?

$30,000-$40,000:

5

$40,000-$50,000:

3

Average cost per stage:

~$27,250 per stage


9. Do you expect fracking prices to increase, remain the same, or decrease over the next three months?

Remain the same (0%):

8


                                                                     End Statistical Survey