Move over Texas Oilmen....for North Dakota?

[MKSheppard]

Link

Dakota's oil fields turn farmers into millionaire drillers
By Anthony Effinger
THE BLOOMBERG NEWS
Sunday, June 15, 2008

John Bartelson, who smokes Marlboro Lights through fingers blackened with tractor grease, may look like an average wheat farmer. He isn't. He's one of North Dakota's new oil barons.

Every month, he gets a check for tens of thousands of dollars from a company in Houston called EOG Resources Inc., which drilled two oil wells on his land last year. He says the day his first royalty check arrived was one to remember.

"I smiled to beat hell, and I went to town and had a beer," Bartelson, 65, says.

His new wealth springs from the Bakken formation, a sprawling deposit of high-quality crude beneath the durum wheat fields of North Dakota, Montana and southern Saskatchewan and Manitoba. The Bakken may give the United States -- the world's biggest importer of oil -- a new domestic energy source.

Unlike the tar from Canada's oil sands, Bakken crude needs little refining. Swirl some of it in a Mason jar and it leaves a thin, honey-colored film along the sides. It's light -- almost like gasoline -- and sweet, meaning it's low in sulfur.

Best of all, the Bakken could be huge. The Geological Survey's Leigh Price, a Denver geochemist who died of a heart attack in 2000, estimated that the Bakken might hold 413 billion barrels. If so, it would dwarf Saudi Arabia's Ghawar, the world's biggest field, which has produced about 55 billion barrels.

The challenge is getting the oil out. Bakken crude is locked 2 miles (3.2 kilometers) underground in a layer of dolomite, a dense mineral that doesn't surrender oil the way more porous limestone does. The dolomite band is narrow, too, averaging just 22 feet (7 meters) in North Dakota.

The USGS said in April that the Bakken holds as much as 4.3 billion barrels that can be recovered using today's engineering techniques. That's a fraction of the oil that Price said should be there, but it's still the largest accumulation of crude in the 48 contiguous U.S. states. North Dakota, where Bakken exploration is most intense now, won't become Saudi Arabia unless technology improves.

For decades, the Bakken was the fool's gold of the oil industry. The name describes a geological formation that looks like an Oreo cookie: two layers of black shale that bleed oil into the middle layer of dolomite. It's named after Henry O. Bakken, the North Dakota farmer who owned the land where the first drilling rig revealed the shale layers in the 1950s.

All of the layers are thin -- about 150 feet altogether -- and none of them give up oil easily. In older, vertical wells, oil would often flow for a month and then fizzle.

Now, companies like EOG are drilling horizontally. They go straight down 10,000 feet and then put a slight angle in the mud motor, a 30-foot piece of tubing that drives the bit, so they hit the Bakken sideways, making a horizontal tunnel as much as 4,500 feet long through the dolomite. Then they pump pressurized water and sand into the hole to fracture the dolomite, making cracks for oil to seep through.

It eventually winds up in a pipeline that runs east to Clearbrook, Minn., and then south to Chicago.

Several billionaires are at work in the Bakken. Harold Hamm's Enid, Okla.-based Continental Resources Inc. has leases on 487,000 acres in Montana and North Dakota. Hamm, who started out driving a truck, owns 73 percent of Continental, worth $7.9 billion. Philip Anschutz, 68, founder of Qwest Communications International Inc. and Regal Entertainment Group, is there, too.

The big winner so far has been EOG, formerly a subsidiary of bankrupt energy trader Enron Corp. It drilled a horizontal well in western North Dakota just north of Parshall -- population 1,028 -- in April 2006. The well came online a month later and kicked out 1,883 barrels in the first seven days. Unlike the older vertical wells, it's still going.

Northern Oil & Gas Inc., a five-person company near Minneapolis, makes money without drilling or operating wells. It leases in promising areas like the Bakken and gets paid when someone else uses the land to drill.

The other people doing well in the Bakken are the mineral owners under the oil wells -- folks like John Bartelson. Oil drillers have paid them millions for right of access to the oil deposits.

Bartelson's checks are about to get bigger. One more EOG well just came online, he says, and another is about to be fractured with water. Still another has been permitted for drilling. For now, he's farming. The oil market is fickle, he says. Previous crashes drove the rigs out of North Dakota for years, leaving only the wheat.

"It'll crash again," Bartelson says, sipping on a late- afternoon cup of coffee beside his tractor.

Maybe so. But with crude trading above $125 a barrel, it'll be a long time before the rigs leave again, and John Bartelson is likely to be a wealthy man before they do.

------------------------

Best part is...

Link

U.S. Department of the Interior, U.S. Geological Survey

Reston, VA - North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation.

A U.S. Geological Survey assessment, released April 10, shows a 25-fold increase in the amount of oil that can be recovered compared to the agency's 1995 estimate of 151 million barrels of oil.

Technically recoverable oil resources are those producible using currently available technology and industry practices. USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources.

New geologic models applied to the Bakken Formation, advances in drilling and production technologies, and recent oil discoveries have resulted in these substantially larger technically recoverable oil volumes. About 105 million barrels of oil were produced from the Bakken Formation by the end of 2007.

The USGS Bakken study was undertaken as part of a nationwide project assessing domestic petroleum basins using standardized methodology and protocol as required by the Energy Policy and Conservation Act of 2000.

The Bakken Formation estimate is larger than all other current USGS oil assessments of the lower 48 states and is the largest "continuous" oil accumulation ever assessed by the USGS. A "continuous" oil accumulation means that the oil resource is dispersed throughout a geologic formation rather than existing as discrete, localized occurrences. The next largest "continuous" oil accumulation in the U.S. is in the Austin Chalk of Texas and Louisiana, with an undiscovered estimate of 1.0 billions of barrels of technically recoverable oil.

"It is clear that the Bakken formation contains a significant amount of oil - the question is how much of that oil is recoverable using today's technology?" said Senator Byron Dorgan, of North Dakota. "To get an answer to this important question, I requested that the U.S. Geological Survey complete this study, which will provide an up-to-date estimate on the amount of technically recoverable oil resources in the Bakken Shale formation."

The USGS estimate of 3.0 to 4.3 billion barrels of technically recoverable oil has a mean value of 3.65 billion barrels. Scientists conducted detailed studies in stratigraphy and structural geology and the modeling of petroleum geochemistry. They also combined their findings with historical exploration and production analyses to determine the undiscovered, technically recoverable oil estimates.

USGS worked with the North Dakota Geological Survey, a number of petroleum industry companies and independents, universities and other experts to develop a geological understanding of the Bakken Formation. These groups provided critical information and feedback on geological and engineering concepts important to building the geologic and production models used in the assessment.

Five continuous assessment units (AU) were identified and assessed in the Bakken Formation of North Dakota and Montana - the Elm Coulee-Billings Nose AU, the Central Basin-Poplar Dome AU, the Nesson-Little Knife Structural AU, the Eastern Expulsion Threshold AU, and the Northwest Expulsion Threshold AU.

At the time of the assessment, a limited number of wells have produced oil from three of the assessments units in Central Basin-Poplar Dome, Eastern Expulsion Threshold, and Northwest Expulsion Threshold.
The Elm Coulee oil field in Montana, discovered in 2000, has produced about 65 million barrels of the 105 million barrels of oil recovered from the Bakken Formation.

[Einhander Sn0m4n]

Good. Let's use this as breathing space to enable our conversion to solar, wind, fusion (when it works), and algae oil.

[Singular Intellect]

Good. Let's use this as breathing space to enable our conversion to solar, wind, fusion (when it works), and algae oil.

Pfft...right. This will be just another excuse for people to think "Ah, whew! So we don't really have to do anything now then. We'll worry about it later."

That's of course assuming they even know or care about the problem in the first place.

[J]

The mean estimate of 3.65 billion barrels is enough to fulfill US consumption for 6 months. Yup. 6 months. Hallelujah we're saved, let's all go buy a Hummer.

[GrandMasterTerwynn]

The mean estimate of 3.65 billion barrels is enough to fulfill US consumption for 6 months. Yup. 6 months. Hallelujah we're saved, let's all go buy a Hummer.

And I believe they've got production up to a whole 0.1 million barrels a day now.

[MKSheppard]

The mean estimate of 3.65 billion barrels is enough to fulfill US consumption for 6 months. Yup. 6 months. Hallelujah we're saved, let's all go buy a Hummer.

So by your reasoning, we shouldn't care about oil strikes because they don't have enough oil within them to allow us to run our country for twenty years?

Hell, the Ghawar field (biggest in the world); using Saudi Arabia's publically released figures only can supply the US with about five years of oil, if we invaded the place and took it all for ourselves.

[CaptainZoidberg]

Good. Let's use this as breathing space to enable our conversion to solar, wind, fusion (when it works), and algae oil.

No fission?

[CaptainChewbacca]

The mean estimate of 3.65 billion barrels is enough to fulfill US consumption for 6 months. Yup. 6 months. Hallelujah we're saved, let's all go buy a Hummer.

How about 'Hallelujah we have more time than we thought'. Nobody is proposing running the country on the Bakken formation alone, so I don't know why you feel the need to point out that doing so would be foolish. If we can appreciably increase domestic oil supplies for 10 or 20 years, how is that a bad thing?

[J]

So by your reasoning, we shouldn't care about oil strikes because they don't have enough oil within them to allow us to run our country for twenty years?

That's not what I'm saying at all, my point is these little fields are not a big deal, and there's no reason to get all excited by them. It's not going to save America, it's not even going to make a dent in oil prices in any timeframe. The military might be interested though as it can serve as an SPR of sorts if/when the SPR gets drained. Actually that's ANWR, but Bakken may do, maybe.

Hell, the Ghawar field (biggest in the world); using Saudi Arabia's publically released figures only can supply the US with about five years of oil, if we invaded the place and took it all for ourselves.

9-10 years actually. Ghawar is a bit over 70 billion barrels according to the KSA talking heads while yearly US oil consumption is a bit over a tenth of that.

How about 'Hallelujah we have more time than we thought'. Nobody is proposing running the country on the Bakken formation alone, so I don't know why you feel the need to point out that doing so would be foolish. If we can appreciably increase domestic oil supplies for 10 or 20 years, how is that a bad thing?

Recall that Prudhoe bay was discovered and put into production after the US production peak, it contains, or rather, contained 13 billion barrels or so of recoverable oil, of which 11 billion has been produced. Putting Prudhoe Bay into production barely slowed the decline in US oil supply, and that was back when we were using less oil than we are now. Bakken is around 1/4 the size with very poor flowrates, it's not going to make a significant difference.

[tim31]

Wow, a positive thread about oil and the doubting thomases still have to scream doom. I know, it's not unjust, but fair go, can't we at least cautiously celebrate the good news, for once??

Thanks to Shep for bringing this to us.

[The Duchess of Zeon]

Wow, a positive thread about oil and the doubting thomases still have to scream doom. I know, it's not unjust, but fair go, can't we at least cautiously celebrate the good news, for once??

Thanks to Shep for bringing this to us.

What good news is there? Finds like this are an expected part of most of my scenarios and indeed all peak oil scenarios.

[Illuminatus Primus]

Increases in the total amount of recoverable oil (the area under the curve), does delay and postpone the peak; and sensible resource/reserve management can permit smoother and less disruptive or abrupt substitution and reform.

[Beowulf]

The mean estimate of 3.65 billion barrels is enough to fulfill US consumption for 6 months. Yup. 6 months. Hallelujah we're saved, let's all go buy a Hummer.

That's currently technically recoverable, though. Use of improved techniques may allow most of the other 98% of the estimated reserve in the formation to be extracted.

[Knife]

Wow, a positive thread about oil and the doubting thomases still have to scream doom. I know, it's not unjust, but fair go, can't we at least cautiously celebrate the good news, for once??

Thanks to Shep for bringing this to us.

What good news? The addict found some pill that fell under the couch god knows when and decides to eat it? That's good news?

And I'm hardly a doom and gloomer.

[Surlethe]

The mean estimate of 3.65 billion barrels is enough to fulfill US consumption for 6 months. Yup. 6 months. Hallelujah we're saved, let's all go buy a Hummer.

That's currently technically recoverable, though. Use of improved techniques may allow most of the other 98% of the estimated reserve in the formation to be extracted.

Note that if those improved techniques exist, implementing them and scaling them up will require plenty of time during which we'll be hurting for oil. And note further that we'll still be facing a peak from that field in the future regardless -- one that will hurt even more coming down from, since consumption will be so much higher.

[The Duchess of Zeon]

Increases in the total amount of recoverable oil (the area under the curve), does delay and postpone the peak; and sensible resource/reserve management can permit smoother and less disruptive or abrupt substitution and reform.

I've generally tended to assume a steady rate of reasonable new finds when charting out an upper bound to the end of the plateau and the beginning of the sharp decline from overstretching the fields to about 2028 or 2030 at the outside. This really isn't enough recoverable oil to move the best estimated date for peak outside of the pretty firm 2011 date that most people are coming to agree upon. A couple more lucky strikes might make it 2012, and certainly we'll need more in the future to compensate for reduced production and keep the plateau going until 2030 or so. Regardless, the use of saline injection and other such techniques reduces the overall recoverable oil in a field, and I suspect this water technique used to smash the rock here does the same, which means you shouldn't expect to get that much more out of this field than what can be recovered with present technology.

Even if there are two utterly massive oil fields still to be found in Russia, they're simply going to be pumped at such incredible rates to keep up with world demand while all the rest of the world's oil fields are failing that they'll be exhausted within a fairly short period of time. So in short even with a miracle we're only going to hit 2040 on the plateau, and miracles don't happen. And once we've finished butchering the curve with aggressive saline injection to prolong the plateau, we can expect an awesomely hard fall to the ground due to the fact we'll have been destroying recoverable reserves in the long term to keep up production in the short term.

[MichaelFerrariF1]

What good news? The addict found some pill that fell under the couch god knows when and decides to eat it? That's good news?

And I'm hardly a doom and gloomer.

I think of oil more as a food, albeit an unhealthy one. If you're starving, you eat that unhealthy food while searching for or growing a better alternative.

[Battlehymn Republic]

At least it's another supply when you need to stock up for your neo-Y2K disaster shelters.

[J]

The mean estimate of 3.65 billion barrels is enough to fulfill US consumption for 6 months. Yup. 6 months. Hallelujah we're saved, let's all go buy a Hummer.

That's currently technically recoverable, though. Use of improved techniques may allow most of the other 98% of the estimated reserve in the formation to be extracted.

May, but that's counting chickens before they're hatched. There's nothing in the proof of concept or prototype stage which would allow improved extraction, there's nothing I know of in the design stage either. Someone, somewhere may have a brilliant idea which has yet to be committed to paper in which case it remains to be designed, prototyped, tested, and if successful placed into large scale production. That takes time, usually well over a decade, we likely don't have that much time.

To give an idea of what we're dealing with, take a cup and fill it with clay, then saturate it with water, pack it down nice & hard and pour off any excess water. Then stick a straw in it and try to suck out the water from the clay. Doesn't work too well does it?

[MKSheppard]

That's not what I'm saying

That's exactly what you're saying. It's the same logic that's been trotted out in the past:

"ANWR can only supply x months of oil!" was an argument used for not voting to open ANWR, next to:

*It will take ten years to come online!
*It will harm the caribou and pristine arctic desert!

Additionally, the Bakken field was estimated at 151~ million barrels of oil in 1995. After much serious drilling and exploration in the ten plus years since, it's risen to today's 3 to 4 billion barrels estimate.

And contrary to your claims; this is a lot of oil, equivalent to about 17% of US oil reserves in 2006. It just looks tiny because of the existence of super giant fields elsewhere in the world (Ghawar, etc) that dwarf it.

[aerius]

I have another way of looking at it. If the US is smart, they'll drain, buy, and take over everyone else's oil before drilling the last of their own reserves. Save their own oil as long as possible to help ease the transition to whatever the future is. The more domestic oil production the US has now, the more fucked it is in the future.

[tim31]

What good news is there? Finds like this are an expected part of most of my scenarios and indeed all peak oil scenarios.

Yeah, I probably should have worded that better; my feelings on this are the same as Ein's. However, I still find the tone of the OP more positive than your average PO thread, and that helps for me.

[K. A. Pital]

And contrary to your claims; this is a lot of oil, equivalent to about 17% of US oil reserves in 2006

These reserves are insignificant in face of US consumption, and in the face of world consumption even more so. "A lot" is only meaningful in comparison, and by your own admission, comparison yields us the fact that the field is small and dwarfed by super-giant fields which currently fuel world consumption.

[Stark]

From what I see from the denial 'it's not a problem' crowd is that things like this are seen to support their 'it's not a problem' stance and dramatically undermine all efforts to reduce energy expenditure and move to alternative energy sources. People have a lot of inertia, and if they can say 'see? Plenty of oil' they won't change and the extra time will be wasted.

It's good to find oil, but disproportionate happiness often hides a 'sweet let's waste energy again' attitude.

[tim31]

Yeah, that's the anchor around the neck of the whole affair. But I have to remain optimistic.