North Dakota’s drought is not only devastating for agriculture, it is also complicating things for the state’s oil and gas industry.
North Dakota right now has nine hydraulic fracture crews, which can complete around 54 wells per month, if all their “DUCs” are in a row. DUC’s is industry slang for drilled but uncompleted wells.
Fifty-four is slightly under what the state needs to hold oil production steady, so keeping those crews working is a priority from a state budgeting standpoint.
The crews face, however, a common problem. Namely, there is an extreme drought situation right now, which limits water supplies for such activities. Completing a well typically uses 25 acre-feet of water per well. An acre-foot is the amount of water it would take to cover an acre with 1 foot of water —360,000 gallons. That works out to about 9 million gallons to complete one well.
That’s a lot of water any time, but it’s particularly problematic during a drought, where water restrictions could come into play.
The situation is driving forward what North Dakota Department of Mineral Resources Director Lynn Helms said is a significant innovation, which could help the industry conserve fresh water long-term, even after the drought ends.
The idea involves a small quantity of freshwater with a larger quantity of treated produced water. The approach could reduce the need for freshwater by as much as 75 percent, Helms said.
That works out to 6.75 million fewer gallons of fresh water.
“You’d need to move (the produced water) in some way other than trucking, obviously,” Helms told NDIC commissioners during their Tuesday meeting, as part of an oil outlook report. “And so what we’re working with a couple of companies on is a pipe inside of a pipe, laid across the surface temporarily so that you can prevent leaks.”
Helms estimated it would generally take 2 to 3 miles on average of this double pipe, along with full-time monitoring to ensure that none of the treated salt water leaks.
Assuming water supply issues don’t wind up hampering well completions, North Dakota Pipeline Authority Justin Kringstad said his forecasts are showing good potential for growth in 2021.
“Going forward, the oil price outlooks from EIA and other forecasting agencies are high enough that we should see, again, industry activity return,” Kringstad said.
North Dakota needs 60 to 70 well completions per month to stop the slide in its oil production, and Kringstad said it has been industry’s goal to get back to a growth trend this summer.
“Given our situation, where we’ve got such a shortage of drilling rigs in the state, we’re going to rely heavily on wells that have previously been drilled, but not yet completed. So the slang term for that is DUC well.”
The state already has a number of those in inventory, according to Division of Oil and Gas records, including almost 400 that Kringstad said are particularly good targets for development.
“With 17 rigs and the DUC inventory, it appears that we are in a position where that is sustainable,” Kringstad said. “That we’re not out of inventory because of a shortage of either DUCs or rigs. And so, again, that gives us confidence with the planning side of the world for what we may be needing here in the second half of this year into 2022.”
Helms said the state’s hydraulic fracturing crew count is slowly rising. The state ended the pandemic with five crews, but has nearly doubled that since the beginning of the year. He expects the numbers to get another bump once road restrictions are completely gone.
Each crew can generally complete six wells in a month, which is 54 per month presently. The state needs three more crews to hit the 70-well threshold that keeps production steady.
A Dakota Access shutdown, however, would complicate everything for the state. It would need to find alternate transportation for 400,000 barrels of crude oil per day.
Kringstad said industry would have to essentially fill up every other possible transportation space, and would then need about 150,000 barrels worth of space on rail cars. That would also mean associated services such as crew staffing and unloading services.
“My best estimate right now is that most of those barrels would have to go down to the Gulf Coast to the St. James area,” Kringstad said. “Because you can’t just send these tank cars in. You have to have unloading capabilities.”
Kringstad said it would also probably take a significant amount of trucking to get oil locations where it can be loaded onto train cars.
That would be a significant step back for both public and environmental safety, Attorney General Wayne Stenehjem said.
“It’s a whole brand new safety issue, just like we’ve been trying to say,” he said. “We’re trucking it instead of piping it.”