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Is The Bakken Profitable At $50 Oil?

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Brian Westenhaus

Brian Westenhaus

Brian is the editor of the popular energy technology site New Energy and Fuel. The site’s mission is to inform, stimulate, amuse and abuse the…

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A Boom in Oil Drilling Thanks To Natural Gas

A Boom in Oil Drilling Thanks To Natural Gas

The horizontal drilling and fracturing techniques that press’s favorite devil Halliburton pioneered to trigger the natural gas boom are the same technologies spurring a Canadian and U.S. oil drilling boom. The impact of horizontal drilling and hydraulic fracturing are migrating around the world, stabilizing and lowering not only North American gas prices but also international market prices for the liquefied natural gas now shipped across oceans from nations such as Qatar.

For Canada and the U.S. the oil boom is in the field called the Bakken, a widely spread oil reservoir with top quality oil trapped in a difficult rock right in the center of the North American continent.

Bakken Formation
Bakken Formation in the Williston Basin.

Geologist JW Nordquist discovered the Bakken in 1953. He described it as an “Oreo cookie” arrangement of hard dolomite rock sandwiched between two darker shale layers.  For decades, petroleum geologists thought the Bakken shale was the source of the oil pools in the wider Williston Basin. But in 1999, Leigh Price, a geochemist working for the US Geological Survey (USGS), wrote a paper proposing that most of the oil from Bakken shale was still trapped in the Bakken Formation. He suggested the “cream” in the Nordquist Oreo cookie contained up to 500 billion barrels of crude, making it a prime exploration target. It is the dolomite “filling” that contains the oil causing all the excitement today, although that oil may have formed in the surrounding shale.  Mr. Price died in 2002, before his paper was published. The USGS was skeptical and for years refused to release the report and their review of it.

Meanwhile, an independent petroleum geologist, Richard Findley, reviewed drilling logs from abandoned Bakken wells and concluded that the operators missed the pay zone by drilling right through the hard oil bearing rock between the two shale layers. He interested Lyco Energy, based in Texas, in his theory.  Lyco brought in the services company Halliburton to try out what were then developing technologies: horizontal drilling; and hydraulic fracturing.

Findley, Lyco and Halliburton discovered and developed the Elm Coulee oilfield of eastern Montana in 1997.  The Elm Coulee oilfield now pumps about 50,000 barrels per day of light, sweet crude and is considered a small part of the larger Bakken field.

Non-USGS geochemist and geologist research has largely vindicated Mr. Price.  Non-government estimates of Bakken oil in place have ranged from 10 billion to 500 billion barrels. The most recent, built with sophisticated computer modeling, suggests 300 billion to 400 billion barrels could be realistic.  Every new well fills in the gaps making the later estimates stronger bases for more investments.

By 2008 in an effort to catch up, the USGS estimated that about 4 billion barrels of oil could theoretically be produced from the US part of the Bakken with current technology It represents enough oil to satisfy US consumers for about six months – hardly a game-changer.

Technology is advancing, so actual oil recovery could vastly exceed initial estimates and the Bakken is still a very young field with little development.

Canada’s Crescent Point Energy has tested a fracturing and water-flood recovery technique that boosts recovery from wells in Saskatchewan to 30 per cent of oil in place. “These mainly untapped resource pools provide Crescent Point with over 5,000 drilling locations and the potential to add over 500 million barrels of reserves,” Scott Saxberg, the company’s president and chief executive, told the Calgary Herald newspaper. “It’s unique that it’s light oil, and in our back yard, and it’s low cost,” he told Canada’s National Post.

Production form the Bakken is relatively economical as well. Costs for producing oil from the relatively shallow wells required to tap Bakken oil pools have fallen to about $5 per barrel, compared with tens of dollars per barrel for extracting tar-like bitumen from Canada’s oil sands and chemically converting it into synthetic light crude.  As a measure of the confidence major investments are underway the Canadian pipeline development company Enbridge is expanding their network to accommodate more oil from the Williston Basin.

The U.S. portion is described as the country’s largest oil deposit outside Alaska, and its biggest and most accessible part is in Canada. The Bakken could prove to be one of the largest oilfields in the world.  The American Association of Petroleum Geologists says it is the biggest continuous oil accumulation it has ever assessed.

In a reality check, since Drake’s first well over 150 years ago the hunt has been for wells the flow under their own pressure leading to the gushers then followed by pumping.  The hunt goes on today as seen in the BP blow out fiasco in the Gulf of Mexico.

But most any oil basin is going to have oil formations that are not gushers, with huge amounts of more difficult to recover oil.  The list is just being looked at now.  The Bakken may be big, but it’s actually the first of what is likely to be more to come.

By. Brian Westenhaus

Source: A Natural Gas Boom Sparks an Oil Boom




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