North Dakota Industrial Commission Justin J Kringstad Geological Engineer Director North Dakota Pipeline Authority October 24, 2017
Presentation Outline Current oil transportation dynamics Understanding current and future oil production Pricing update Activity Oil forecasts North Dakota natural gas production Flaring and gas capture Natural gas liquids Pipeline construction update Refrac economics JJ Kringstad - North Dakota Pipeline Authority 2
Estimated Williston Basin Oil Transportation August 2017 JJ Kringstad - North Dakota Pipeline Authority 3 3
Estimated Williston Basin Oil Transportation JJ Kringstad - North Dakota Pipeline Authority 4 4
Estimated ND Rail Export Volumes JJ Kringstad - North Dakota Pipeline Authority 5
Rail Destinations Market Share (July 2017) Data for Rail Destination Market Share Provided by the US Energy Information Administration JJ Kringstad - North Dakota Pipeline Authority 6
JJ Kringstad - North Dakota Pipeline Authority 7
Presentation Outline Current oil transportation dynamics Understanding current and future oil production Pricing update Activity Oil forecasts North Dakota natural gas production Flaring and gas capture Natural gas Liquids Pipeline construction update Refrac economics JJ Kringstad - North Dakota Pipeline Authority 8
North Dakota Oil Differential Based on EIA Data 9 JJ Kringstad - North Dakota Pipeline Authority 9
North Dakota Impact of Smaller Discount 2016 Weighted Average Discount: $7.71 June/July/August 2017 Wt. Average Discount: $5.61 $2.10/BBL Improvement Post DAPL Commercial In-Service 96,148,772 Taxable Barrels In June/July/August 2017 Wt. Avg. Tax Rate in June/July/August 2017: 9.74% Three Month Revenue Impact 9.74% x 96,148,772 x $2.10 = $19,666,269 Additional State Revenue When Compared to Avg. 2016 Discount (~$6+ Million Per Month) Does Not Include Royalty Owner and Industry Revenue Impact 10 JJ Kringstad - North Dakota Pipeline Authority 10
North Dakota Drilling Activity JJ Kringstad - North Dakota Pipeline Authority 11
Statewide Oil Performance Average BKN/TF Well Performance Statewide (Minimum 1 bopd) JJ Kringstad - North Dakota Pipeline Authority 12
Statewide Gas Performance Average BKN/TF Well Performance Statewide (Minimum 1 bopd) JJ Kringstad - North Dakota Pipeline Authority 13
North Dakota Oil Production Forecast JJ Kringstad - North Dakota Pipeline Authority 14
North Dakota Oil Production Forecast 15 JJ Kringstad - North Dakota Pipeline Authority 15
North Dakota Forecast Activity Assumptions JJ Kringstad - North Dakota Pipeline Authority 16 16
Williston Basin Oil Production & Export Capacity, BOPD Production forecast is for visual demonstration purposes only and should not be considered accurate for any near or long term planning. JJ Kringstad - North Dakota Pipeline Authority 17
TransCanada: Energy East Canceled Proposed Upland Pipeline Connection to Williston Basin Successful Open Season During 2014 Initial Capacity 220,000 BOPD (Expandable to 300,000 BOPD) Target In-service Date: 2020 Energy East Project Capacity 1.1 MMBOPD JJ Kringstad - North Dakota Pipeline Authority Map: NEB NDPA Upland Addition 18
Presentation Outline Current oil transportation dynamics Understanding current and future oil production Pricing update Activity Oil forecasts North Dakota natural gas production Flaring and gas capture Natural gas liquids Pipeline construction update Refrac economics JJ Kringstad - North Dakota Pipeline Authority 19
NDPA ND Gas Production Forecast JJ Kringstad - North Dakota Pipeline Authority 20
Solving the Flaring Challenge GREEN % of gas captured and sold Blue % flared from zero sales wells Orange % flared from wells with at least one mcf sold. Simple Terms Blue Lack of pipelines Orange Challenges on existing infrastructure Statewide Aug 2017 Data Non-Confidential Wells JJ Kringstad - North Dakota Pipeline Authority 21
Solving the Flaring Challenge JJ Kringstad - North Dakota Pipeline Authority 22
Major Gas Pipeline and Processing Infrastructure Whiting WBI Transmission JJ Kringstad - North Dakota Pipeline Authority 23
North Dakota Captured* NGL s JJ Kringstad - North Dakota Pipeline Authority *Non-flared NGL s & Assumes 10 GPM 24 24
Major NGL Pipeline and Processing Infrastructure Kinder JJ Kringstad - North Dakota Pipeline Authority 25
NGL Takeaway Options Are Limited 26 JJ Kringstad - North Dakota Pipeline Authority 26
Presentation Outline Current oil transportation dynamics Understanding current and future oil production Pricing update Activity Oil forecasts North Dakota natural gas production Flaring and gas capture Natural gas liquids Pipeline construction update Refrac economics JJ Kringstad - North Dakota Pipeline Authority 27
North Dakota Pipeline Construction JJ Kringstad - North Dakota Pipeline Authority Sources: NDIC & PHMSA 28
North Dakota Pipeline Construction JJ Kringstad - North Dakota Pipeline Authority Sources: NDIC & PHMSA 29
New Miles and Well Completions JJ Kringstad - North Dakota Pipeline Authority 30
2008 2009 2010 6,262 mi 2 6,493 mi 2 9,866 mi 2 2011 2012 2013 13,735 mi 2 16,267 mi 2 13,428 mi 2 2 Mile Buffer Around New Wells By Year 2014 2015 2016 12,053 mi 2 8,433 mi 2 4,206 mi 2 2017 YTD 3,578 mi 2 Background Map: Esri, HERE, DeLorme, MapmyIndia, OpenStreetMap contributors, and the GIS user community JJ Kringstad - North Dakota Pipeline Authority 31
New Miles and Activity Footprint *2017 Forecasted JJ Kringstad - North Dakota Pipeline Authority 32
Predicting New Miles With Activity Footprint JJ Kringstad - North Dakota Pipeline Authority 33
Evolution of Oil Gathering in ND Statewide Totals JJ Kringstad - North Dakota Pipeline Authority 34
Evolution of Oil Gathering in ND JJ Kringstad - North Dakota Pipeline Authority 35
Gas Gathering & Processing JJ Kringstad - North Dakota Pipeline Authority 36
Gas Gathering & Processing JJ Kringstad - North Dakota Pipeline Authority 37
Solving the Flaring Challenge JJ Kringstad - North Dakota Pipeline Authority 38
Presentation Outline Current oil transportation dynamics Understanding current and future oil production Pricing update Activity Oil forecasts North Dakota natural gas production Flaring and gas capture Natural gas liquids Pipeline construction update Refrac economics JJ Kringstad - North Dakota Pipeline Authority 39
Bakken Refracs Updated From Previous Refrac Work 185 Wells, Up From 142 List Cleaned Up With DMR Assistance JJ Kringstad - North Dakota Pipeline Authority 40
Refracs In the Bakken* *While careful work was performed to discover as many non-confidential, modern refracs as possible, this data set is likely not all inclusive. JJ Kringstad - North Dakota Pipeline Authority 41
Refrac Completion Year* *While careful work was performed to discover as many non-confidential, modern refracs as possible, this data set is likely not all inclusive. JJ Kringstad - North Dakota Pipeline Authority 42
Example: Pre/Post Refrac Oil JJ Kringstad - North Dakota Pipeline Authority 43
Example: Pre/Post Refrac Oil JJ Kringstad - North Dakota Pipeline Authority 44
Performance Pre/Post Refrac JJ Kringstad - North Dakota Pipeline Authority 45
Performance Pre/Post Refrac JJ Kringstad - North Dakota Pipeline Authority 46
Example: 257,000 BBLS of Incremental Production JJ Kringstad - North Dakota Pipeline Authority 47 47
Refrac Economics Methodology Incremental Production Above Original Well Decline Profile Assumes Refrac Decline Curve Profile Matches Original Well JJ Kringstad - North Dakota Pipeline Authority 48
Refrac Summary of $45 Wellhead Oil JJ Kringstad - North Dakota Pipeline Authority 49
Refrac Breakeven Summary JJ Kringstad - North Dakota Pipeline Authority 50
Contact Information Justin J. Kringstad, Director North Dakota Pipeline Authority 600 E. Boulevard Ave. Dept. 405 Bismarck, ND 58505-0840 Phone: (701)220-6227 Fax: (701)328-2820 E-mail: jjkringstad@ndpipelines.com Websites: www.pipeline.nd.gov www.northdakotapipelines.com JJ Kringstad - North Dakota Pipeline Authority 51 51