John Argo, vice-president for the Bakken shale's Williston basin at privately held US upstream independent Continental Resources, spoke to Stephen Cunningham on the sidelines of last week's Argus Global Crude Summit Americas in Houston. Edited highlights follow:
Are the Bakken's best days over?
People who are not in the Williston may look at the Williston and [Texas'] Eagle Ford similarly: ‘They've been going for 20 years, they've drilled so many wells. It must be almost done.' Yet every year we keep getting better. Over time you drill and develop the cores. The basin is massive. There are 50,000 locations that can be ultimately drilled in the Williston. We've only drilled roughly half of that to date. There's still a lot to do. That second tier — you're getting to lower reservoir pressure, maybe lower oil in place. But by using technology advancements, drilling longer laterals, more effective stimulation designs, and ultimately being able to handle the water and all three streams more effectively, you're using an essentially lower-quality reservoir of the overall basin, but yet the economics in many cases are even better than they were when we drilled the core. There's a bright future ahead for the Williston.
What is the role of private companies such as Continental?
When we were public, we weren't leveraging the public capital equity market specifically, but we were still having to deal with all the requirements that go through the quarterly cycle. We are focused on the long term. That long-term vision doesn't fit perfectly into a three-month cycle. Being free releases us from the burden of that cycle, and we can focus on what creates the most value.
Is cost inflation still a problem?
We've seen that dissipate. We've seen supply chains strengthen. There's uncertainty on how some of the latest macro events might impact that. We're all just trying to make sure we're protecting ourselves and our ability to keep the products that we need at the right price.
What about labour shortages?
That's a challenge we always have. The Williston is a difficult environment, it's a tough place to live and work, specifically in the winter. We've been blessed to have a strong team and to be able to find the talent we need to deliver our goals.
What breakevens do you target?
We like to target a $40/bl cost of supply or less. Not all of our assets are going to meet that target. But that's ultimately what we're trying to deliver. Over the past 3-4 years, we've continued to deliver pretty close to that.
Are efficiency savings capped?
We're ultimately only getting 10pc of the oil out of the ground. So that's my optimism for incremental efficiency gains. I don't know exactly how we're going to get there, but I'm confident we're going to find ways to get a lot more.
How do you view Donald Trump's deregulation agenda?
When we look across our industry, everything takes longer than we probably would like it to take. If that's unleashed, that's a huge boon to our overall industry. We're going to see a lot of change here. It's already happening.
