Harrisburg

Background: this is a reader who follows natural gas very, very closely. The reader is unquestionably one of the better sources of "background" information that I have regarding natural gas. This particular reader says he/she is not particularly knowledgeable about tight oil -- the Bakken revolution. Interestingly this reader has made incredibly insightful observations about tight oil based on what he has seen in the natural gas sector which has had a similar trajectory as oil due to horizontal fracking. 

I have given the reader a "call sign" of Harrisburg for now, but that might change. 

When this reader sends notes on the CLR Permian gambit, I will post them pretty much immediately, with minimal editing and no comments. My observations of the Harrisburg comments will be found on other posts in this blog.

The following needs to be formatted correctly which will be done later.

November 5, 2021, 9:00 p.m.:

Quick followup to CLR's Permian transaction ...

1.  Years ago, a Canadian company (Crescent Point?) said that the Canadian mineral ownership situation facilitated HUGE sized, contiguous acreage which - they felt - would be necessary if extensive waterflood EOR were to be attempted.

That 32,000 surface acreage that CLR bought is a near solid block of minerals that CLR owns - not leases - outright as it was a large ranch originally purchased by Parsley Energy.

This bypasses the potentially messy issue of co-mingled hydrocarbon 'ownership' if natgas/water is injected and oil migration travels off leases.

2. Everyone has been wondering, forever, what EOG is up to in the Parshall. That solid block was assembled 2005/6 timeframe for peanuts by that far sighted geologist who recognized the Bakken potential after Montana showed viable results.

EOG may have been 'sitting' on this ultra rich acreage and holding off repressurization operations because  ...

A. Waiting for better techniques/processes to emerge. (Their Eagle Ford EOR is highly effective and  offers many 'lessons learned'.

B. Not wanting to 'tip off' the rest of the industry as valuations could skyrocket if it became known that recovery rates now exceed 30/35% ... or more.

This last may be amongst the most fascinating consequences as huge Unitization/Drilling Spacing Units will take on extraordinary importance vis a vis value compared to smaller, discontinuous units nearby. I believe that you may have mentioned an uptick in Unitzation orders in the Bakken. 

 

November 5, 2021, 12:30 p.m.:

Like many, I felt it somewhat odd that CLR would make a - seemingly - relatively high-priced purchase in a new basin.

Extensive musings have led me to some highly speculative scenarios. 

The following is based as much on gut feelings as it is hard data, largely due to the fact that public technical info has become somewhat scarce compared to the 'early days' of 2010 - 2015.

I am guessing that the initial recovery is now way higher than the last-reported 12/15%. (The figure of ~20% on new wells was stated by a CLR executive back around 2018). This higher rate may be what you are witnessing in CLR's Long Creek Unit and, in fact, your multi year long observing may uniquely position you to verify/disprove whether my theory may be correct. On an ultra micro level (literally, well by well), you are able to compare newer, nearby well production with older wells on the same pad/area.

My thesis stems partially from the surprising lack of technical information on newer Artificial Lift technologies, advances in EOR (heard much mention of that topic lately?), and an overall silence, so to speak, surrounding advances in well construction and completion protocols after years of chest thumping from executives everywhere.

If - in kind of a 'thought experiment' exercise - CLR has advanced in well targeting (that is, positioning laterals where communication with adjacent wells can have positive as well as negative influences via added/lessening of pressure (water and/or injected gas being the 2 most likely agents), AND can now fracture the rock in such a manner that this interwell communication can be somewhat controlled, then much higher hydrocarbon recovery may be realized both initially and long term.

Additional capital outlays would be minimal.

A validation or disproving of my theory is apt to be found by a close monitoring of new CLR wells' production in the Bakken versus older nearby wells.

I am not sure if scout ticket/well file info would contain enlightening info, but the installation of High Pressure gas compressors onsite could be a big clue.

Early movers/adopters of these techniques would attempt to maintain secrecy so as to obtain enormous near term commercial advantage

If the public became aware of a near doubling of shale liquid hydrocarbon recoverability, ripple effects would be enormous.

Anyway, this 'spiel is clearly my getting WAY ahead of my headlights, but some aspects - particularly regarding higher initial well production - should be observable  to discerning followers of these matters.