NEW YORK, July 25 Hess Corp said it will
increase oil drilling in North Dakota's Bakken prospect this
year despite increased costs in the play and the recent fall in
world crude prices.
The New York-based company increased its 2012 Bakken capital
budget by $1 billion to $3 billion dollars as it eyed ramped up
drilling in areas where it has a high working interest in wells.
Hess expects to spend an average $11 million on every Bakken
well this year, much higher than its previous estimates of $8.5
million per well after a white sand shortage earlier in the year
forced the company to use more expensive ceramic proppants,
materials used in hydraulic fracturing.
The company's slower-than-expected transition to the less
expensive "sliding sleeve" hydraulic fracturing technology also
pushed costs higher.
Nonetheless, Hess reduced its average Bakken well cost to
$11.6 million a well in the second quarter, down from $13.4
million per well in the first quarter, Greg Hill, president of
worldwide exploration and production, said during the company's
second-quarter earnings call.
Hess also plans to spend more on infrastructure projects in
North Dakota and foresees higher costs from wells that it has
interests in but does not operate.
Hess' production came in better than expected in the second
quarter thanks to production from its Bakken properties, where
output rose to 55,000 barrels of oil equivalent (BOE) a day in
the second quarter, up from 25,000 BOE a day last year.
Oil production in the Bakken prospect rose above 574,000
barrels-per-day in May, according to data from the state