Government officials in North Dakota said Jan. 2 that state's oil fields may contain twice the amount of oil previously estimated and that the state's crude oil production will double within the decade. If the estimate is correct, North Dakota, currently the fourth-largest oil-producing state in the US, will jump to second place behind Texas.
Lynn Helms, director of the North Dakota Department of Mineral Resources, says the state is currently producing about 350,000 barrels of oil per day and should produce about 110 million barrels in 2010, up from 79.7 million in 2009 and more than double the amount produced three years ago.
Record rig activity, pushed by strong crude oil prices coupled with advances in drilling technology, has enabled the state to see the two-fold increase in production. The drilling and completion technology alone has cut the time required to complete a well from 65 days in 2008 to 25 days in 2010.
"We are now looking at 700,000 barrels a day, and we see that coming in the next four to seven years," said Helms.
At that rate, North Dakota would surpass California and Alaska based on current production levels in those states. North Dakota, which has about 5,300 producing wells, now accounts for about 6% of total US crude oil production. Roughly 2,000 of those wells have been drilled in the last three years, mainly in the Bakken Shale and Three Forks plays. About 95% of the wells drilled target those formations.
The Bakken Shale is in the Williston Basin in North Dakota. However, it is found in the adjacent state of Montana and also the Canadian provinces of Saskatchewan and Manitoba. Although oil has been found in other shale formations – notably the Niobrara in Colorado, Nebraska, and Wyoming; the Eagle Ford in South Texas; and California's Monterey Shale – all are compared to the Bakken when resource potential is discussed.
We have known that the Bakken Shale had abundant oil reserves since the 1950s. Oil was first discovered in the Bakken in 1951, and it was initially described by geologist J. W. Nordquist in 1953. However, development lagged because exploration and production companies did not have the technology to extract the oil economically until recent years. Low oil prices and the high cost of recovery made the Bakken oil uneconomical for decades.
All this changed when the price of oil rose to over $50 a barrel in the past decade and peaked at around $140/bbl in 2008. Although prices fell during the economic collapse of late 2008 and 2009, they have rebounded quickly with prices currently flirting with $90/bbl and up. This makes exploration and production of Bakken crude a no-brainer. There has been a land rush in the Bakken by American, Canadian, and international oil companies that has made some land-holding farmers overnight millionaires as they leased their land to oil developers.
On April 10, 2008, the US Geological Service issued a report estimating the amount of technically recoverable oil within the Bakken formation at 3.0 to 4.3 billion barrels, with a mean of 3.65 billion. The state of North Dakota also released a report that month which estimated that there are 2.1 billion barrels of technically recoverable oil in the Bakken. This would make the Bakken shale the largest oil find in US history outside the oil fields of Alaska.
The USGS also estimates approximately 1.85 tcf associated/dissolved natural gas and 148 million barrels of natural gas liquids in the Bakken formation.
The drilling and completion technology to recover Bakken Formation oil involves vertical drilling followed by horizontal drilling, formation fracturing, and the use of proppants.
In recent years, oil companies drilling in the Williston Basin have discovered the Sanish-Three Forks play, which lies just under the Middle Bakken Zone. Some of the Bakken operators are targeting this formation, and the wells so far have been strong producers. Brigham Exploration Company, based in Austin, Texas, was one of the first companies to drill into the Sanish-Three Forks formation. Since then, several other operators have followed suit.
A number of publicly traded oil and gas companies currently have drilling rigs in the Bakken region, with varying asset prices, risks, and potentials. These include EOG Resources Inc., Continental Resources Inc., Whiting Oil & Gas Inc., Marathon Oil Corporation, Brigham Exploration, Hess Corporation, and Samson Oil and Gas Ltd. A niche fund, the Williston Basin/Mid-North America Stock Fund (ICPAX) invests in the publicly traded companies that are profiting from this massive oil find.
More Oil & Gas Financial Journal Current Issue Articles
More Oil & Gas Financial Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com
