Washington — Continental Resources, the largest oil producer in North Dakota, has doubled its Bakken oil recovery estimates, claiming that as much as 40 billion barrels of crude may ultimately produced from the play, the company said Tuesday.
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"With today's completion technology we are recovering 15% and potentially 20% of the oil of the oil in place on a primary basis," Jack Stark, Continental's president, said during an earnings call Tuesday. "This is substantially higher than the recoveries that we thought possible back in 2011."
Continental, which estimated in 2011 that about 20 billion barrels could be recovered from the Bakken, now claims that 30 billion to 40 billion barrels of the 250 billion barrels of oil in place will be recovered.
"There's a lot more oil to come out of the Bakken," Harold Hamm, Continental's chairman and CEO, said Tuesday.
Using a North Dakota Industrial Commission estimate that about 50,000 potential wells remain to be drilled in the Bakken, Stark said Tuesday that each well would have to produce about 570,000 barrels in order to reach Continental's new estimates for recoverable oil.
"This is clearly a reasonable expectation for Bakken wells on average," Stark said.
North Dakota oil production averaged a record 1.29 million b/d in August. Continental output accounted for 12% of that production, the company said Tuesday.
Continental, which has stopped hedging its oil production and shifted roughly 95% of its drilling to crude oil development, produced 167,643 boe/d in the Bakken in Q3, up 23% from the same quarter last year and a new record, the company reported Tuesday.
Continental, which has eight drilling rigs in the Bakken, up two from Q3 2017, saw the oil portion of its production grow from 57% in September to 58% in October and now expects oil to be 60% of production by the end of the year.
The company had no plans to hedge its oil production as a tighter global supply/demand balance later this year will bolster prices, Hamm said. Hamm said he expects global oil demand to grow by 1.5 million to 1.8 million b/d as upcoming sanctions on Iranian crude exports will take about 800,000 b/d off the market.
Overall, Continental produced over 296,900 boe/d in Q3, up 13,000 boe/d from Q2 and up more than 54,100 boe/d from Q3 2017.
Continental's crude oil differential in Q3 was $3.72/b below the NYMEX daily average, compared to $4.98/b in Q3 2017, the company said. The company's differentials will mainly be tied to future Bakken pipeline takeaway capacity, according to Ramiro Rangel, a Continental senior vice president.
Bakken differentials have widened recently, opening up the crude-by-rail arbitrage to the Gulf Coast, market sources said Tuesday (see story, 1948 GMT). -- Brian Scheid, email@example.com
-- Edited by Jeff Mower, firstname.lastname@example.org