December 2016

Presentation Slides

December 2016

Justin J Kringstad Geological Engineer

Director

North Dakota Pipeline Authority

Presentation Outline

• Understanding current and future oil production

– Activity

– Drilling economics

– Forecasts

• Williston Basin oil transportation dynamics

– Interstate oil movements

– Intrastate oil movements

• North Dakota natural gas production

– Flaring and gas capture

– Natural Gas Liquids

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North Dakota Drilling Activity

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Initial Production (IP) Year – 2016 YTD Non-Confidential

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Bakken IP Rates

Average BKN/TF Well Performance in Williams, McKenzie, Dunn, & Mountrail Counties (Minimum 1 bopd)

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Improving Well Performance

Average BKN/TF Well Performance in Williams, McKenzie, Dunn, & Mountrail Counties (Minimum 1 bopd)

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Improving Well Performance

A Quick Look at Bakken

Drilling Economics…

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North Dakota Oil Differential

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Based on EIA Data

Key Economic Assumptions

• $6-$8 Million Well Costs

• $45/BBL & $2.00/MCF Wellhead Pricing

• 1/6 Royalty

• Zero Flaring

• Assumed 10-20% IRR to drill (calculated after

production taxes and royalties)

• No Tax Incentives Included

• Production rate is 30-day average

• All Bakken/Three Forks wells drilled in 2008+

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© OpenStreetMap contributors

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Peak Month Minimum 400 BOPD

$45 Wellhead

6,616 Wells

© OpenStreetMap contributors

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Peak Month Minimum 500 BOPD

4,972 Wells

$45 Wellhead

© OpenStreetMap contributors

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Peak Month Minimum 600 BOPD

3,533 Wells

$45 Wellhead

© OpenStreetMap contributors

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Peak Month Minimum 700 BOPD

2,319 Wells

$45 Wellhead

© OpenStreetMap contributors

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Peak Month Minimum 800 BOPD

1,500 Wells

$45 Wellhead

© OpenStreetMap contributors

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Peak Month Minimum 900 BOPD

930 Wells

$45 Wellhead

© OpenStreetMap contributors

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Peak Month Minimum 1,000 BOPD

587 Wells

$45 Wellhead

© OpenStreetMap contributors

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Peak Month Minimum 1,200 BOPD

250 Wells

$45 Wellhead

© OpenStreetMap contributors

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Peak Month Minimum 1,500 BOPD

70 Wells

$45 Wellhead

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Summary of $45 Wellhead Oil

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Breakeven Summary

Forecasting Future Activity…

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US Crude Oil Storage (Excl. SPR)

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US Crude Oil Storage (Excl. SPR)

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North Dakota Forecast Activity Assumptions

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*Non-Confidential Bakken/Three Forks Production Only

Base Production Declines*

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NDPA ND Oil Production Forecast

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NDPA ND Oil Production Forecast

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North Dakota Oil Production Forecast

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Production forecast is for visual demonstration purposes only and should

not be considered accurate for any near or long term planning.

Presentation Outline

• Understanding current and future oil production

– Activity

– Drilling economics

– Forecasts

• Williston Basin oil transportation dynamics

– Interstate oil movements

– Intrastate oil movements

• North Dakota natural gas production

– Flaring and gas capture

– Natural Gas Liquids

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Estimated Williston Basin Oil Transportation

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September 2016

Estimated Williston Basin Oil Transportation

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Estimated ND Rail Export Volumes

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Rail Destinations Market Share (Sep. 2016)

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Data for Rail Destination Market Share Provided by the US Energy Information Administration

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Major Rail Lines and Refineries

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$45.11

$42.67

$41.81

$40.22

$44.21

EIA September 2016 Refiner Acquisition Cost

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Cushing $53.71

Brent $56.47 WTI + $2.76

Crude Oil Prices – Dec 12, 2016

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Pricing Data: Bloomberg

Williston Basin Truck Imports and Exports with Canada

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Data for truck imports/exports chart is provided by the US International Trade Commission

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.

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Evolution of Oil Gathering in ND

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Evolution of Oil Gathering in ND Statewide Totals

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Estimated Loaded Oil Truckloads Per Day

April 2015 Data 220 bbls/Truck

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Presentation Outline

• Understanding current and future oil production

– Activity

– Drilling economics

– Forecasts

• Williston Basin oil transportation dynamics

– Interstate oil movements

– Intrastate oil movements

• North Dakota natural gas production

– Flaring and gas capture

– Natural Gas Liquids

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Major Gas Pipeline and

Processing Infrastructure

WBI Transmission

Whiting

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Simple Terms Blue – Lack of pipelines Orange – Challenges on existing infrastructure

GREEN – % of gas captured and sold Blue – % flared from zero sales wells Orange – % flared from wells with at least one mcf sold.

Sep 2016 Data – Non-Confidential Wells Statewide

Solving the Flaring Challenge

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Solving the Flaring Challenge

Capturing the 3% Faster Well Connections

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Solving the Flaring Challenge

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Wellhead Gas Capture – Locations

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Wellhead Gas Capture – Intake Volume

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Wellhead Gas Capture – NGL Output

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Wellhead & Plant Gas Capture

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Wellhead & Plant Gas Capture

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Plant Natural Gas Liquids - (Aug. 2016)

NDPA ND Gas Production Forecast

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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

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Contact Information

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