Bakken formation

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The Bakken formation is a rock unit from the Late Devonian to Early Mississippian age occupying about 200,000 square miles (520,000 km2) of the subsurface of the Williston Basin, underlying parts of Montana, North Dakota, and Saskatchewan.

Hydraulic fracturing has caused a recent boom in Bakken production. By the end of 2010 oil production rates had reached 458,000 barrels (72,800 m3) per day.

In May 2013 the USGS updated its oil reserves assessment, saying the Bakken play has an estimated 3.65 billion barrels of undiscovered, technically recoverable oil, and the Three Forks formation an estimated 3.73 billion barrels of undiscovered, technically recoverable oil. For natural gas, the plays had a mean estimate of 6.7 trillion cubic feet of as-yet undiscovered natural gas and 530 million barrels of natural gas liquids.

Introduction

North Dakota's total oil production has approximately tripled since 2005 due largely to development of the Bakken formation. The Bakken is a shale oil deposit. It is considered to be light-sweet crude oil, trapped 10,000 feet below the surface within shale rock. Bakken shale consists of three layers, an upper layer of shale rock, a middle layer of sandstone/dolomite, and a lower layer of shale rock. The middle sandstoen layer is what is commonly drilled and fracked.

The Bakken Formation.

Operators increased North Dakota’s production from 98,000 b/d in 2005 to over 307,000 b/d in 2010 (and close to 400,000 in 2011), and most experts anticipate that the field could produce a million barrels daily by the end of 2020. According to US Geological Survey there are at least 4 billion barrels of recoverable oil in North Dakota; other estimates indicate 4-5 times more.

For the past 60 years North Dakota has been an oil producing state. However, in recent years the state has seen a boom in the state's Bakken region. As such, North Dakota has become the fourth largest oil producing state in the country and one of the largest onshore plays in the United States. The Bakken shale formation extends beyond North Dakota into Eastern Montana and neighboring territories of Saskatchewan and Manitoba to the north in Canada. While its success has been largely attributed to advances in oil field technology, primarily horizontal drilling and hydraulic fracturing, it has been argued that a number of circumstances have come together to make the Bakken a successful oil play, including high oil prices, widespread and ready access to privately held prospects, and low natural gas prices.

Horizontal drilling in North Dakota's area of the Bakken began in the 1980s, but was not widely used until the last decade. In the early 2000s Bakken developers began drilling horizontal laterals into the Middle Bakken formation, the sandstone layer between the two shale layers. Over the past several years fracking in the Bakken has increased dramatically. While this increases the cost of drilling, it also increases initial production rates and the ultimate recovery of oil from the well.

The first commercial Bakken well at Elm Coulee which is located in Richland County, Montana. The well was completed in 1981 by Coastal Oil and Gas. As of 2007 The total number of horizontal Bakken wells drilled in the Elm Coulee area was more than 500 and included more than 800 lateral drill locations.

An industry report released in 2012 by Bentek Energy stated that the Williston Basin's production of natural gas is expected to grow nearly sixfold, to 3.1 billion cubic feet per day, by 2025.

Government support

The fiscal 2013 energy and water budget proposed by Republicans in April 2012 on the House Appropriations Committee includes $554 million, a $207 million increase from 2012, for the Department of Energy to develop technologies for the use of coal, natural gas, oil and other fossil fuels. That sum includes a new $25 million line item for the development of oil shale, such as the tight oil in the Bakken formation of North Dakota.

Oil production estimates

Wells have been drilled along the Bakken formation in Montana with active wells already producing oil in North Dakota. Experts say oil appears to extend from the Bakken formation of eastern Montana into Alberta, and south to the foot of the Rocky Mountains. It has been reported that hydraulic fracking will likely be required to extract the oil, if it is found. Land leases for fracking in the region have increased dramatically in recent years.

The greatest Bakken oil production comes from Elm Coulee Oil Field, in Richland County, Montana, where production began in 2000 and is expected to ultimately total 270 million barrels (43,000,000 m3). In 2007, production from Elm Coulee averaged 53,000 barrels per day (8,400 m3/d) — more than the entire state of Montana a few years earlier.

New interest developed in 2007 when EOG Resources of Houston, Texas reported that a single well it had drilled into an oil-rich layer of shale below Parshall, North Dakota was anticipated to produce 700,000 barrels (110,000 m3) of oil. This, combined with other factors, including an oil-drilling tax break enacted by the state of North Dakota in 2007, shifted attention in the Bakken from Montana to the North Dakota side. The number of wells drilled in the North Dakota Bakken jumped from 300 in 2006 to 457 in 2007. Those same sources show oil production in the North Dakota Bakken increasing 229%, from 2.2 million barrels (350,000 m3) in 2006 to 7.4 million barrels (1,180,000 m3) in 2007.

The state Industrial Commission said crude production in September 2011 totaled 464,122 barrels a day, or nearly 123,000 more barrels than September 2010. Ron Ness, president of the North Dakota Petroleum Council, said the state should end 2011 with about 150 million barrels of oil produced.

According to North Dakota government statistics, daily oil production per well seems to have peaked (or at least reached a plateau) at 145 barrels in June 2010. Although the number of wells doubled between June 2010 and December 2011, oil production per well remains essentially unchanged. However, total oil produced continues to increase, as more wells are brought online.

Bakken producing zones are mainly present in Western North Dakota, Southern Saskatchewen, and Eastern Montana. The Bakken is one of the largest (possibly the largest) continuous oil accumulation in the world. It is an over pressured system which is in part responsible for high IP rates. The high pressure is in the formation suggests that the oil is contained within the petroleum system. This means that the oil remains in place and is tightly contained throughout the geologic structure.

In April 2013 a government study doubled its estimates for the Bakken's recoverable crude supplies. The U.S. Geological Survey estimated 7.4 billion barrels of undiscovered, technically recoverable oil in its study.

Bakken production peaked at 1.22 million barrels per day in December 2014. Since production has varied. The U.S. Energy Information Administration (EIA) predicts Bakken production to drop by 23,000 barrels in November 2015.

OilPrice reported in November 2015 that PBF Energy and Monroe Energy will likely to decrease their purchases of oil from North Dakota. Philadelphia Energy Solutions has cut its North Dakota oil purchases by 80 percent. The company is favoring oil from Nigeria, Chad and Azerbaijan.

It was reported in February 2016 that Continental Resources and Whiting Petroleum, the two top producers in the Bakken, will stop fracking and bringing new wells into production. Continental plans to drill wells in the Bakken through the rest of 2016, but will leave them uncompleted to cut costs. Bloomberg reported that Continental Resources has no more crews in the Bakken. Whiting Petroleum estimates it will leave 73 uncompleted wells in the Bakken by the end of 2016.

Bakken land leases

Small and independent oil companies that made their start developing natural gas resources moved into the Bakken and accumulated acreage before the oil boom in the area. As such, the most sought after lands have already been leased for development. New Entrants into the Bakken must participate in joint ventures or buy out another company. This has not discouraged investment as several billion dollars were exchanged in mergers and acquisitions in the Bakken in the fourth quarter of 2010 alone.

Water usage

In 2012 it was estimated that 1.5 million gallons of water were used per fracked well in North Dakota's Bakken formation. However, other estimates put the range between 1.5 million and 3.5 million gallons of water used per frack. Additionally, The North Dakota Department of Mineral Resources estimates that 20 million to 30 million gallons of water is used per day in fracking operations in North Dakota, or 7.3 billion to 11 billion gallons of water a year. These projections state that this amount of water will be needed to produce oil from fracking in the Bakken for decades to come.

Flaring

In September 2011, The New York Times reported that 30 percent of the natural gas (methane) produced in North Dakota's Bakken formation is burned off as waste: "Every day, more than 100 million cubic feet of natural gas is flared this way — enough energy to heat half a million homes for a day. The flared gas also spews at least two million tons of carbon dioxide into the atmosphere every year, as much as 384,000 cars or a medium-size coal-fired power plant would emit." The gas rises up with the more valuable oil, and with less economic incentive to capture it, drillers treat the gas as waste and burn it.

Economic impact on North Dakota economy

Oil production in North Dakota accounts for six percent of domestic production in the state and is largely responsible for reversing two decades of declining oil production. Currently North Dakota is running a surplus economy. According to the North Dakota Petroleum Council, crude oil taxes on production and extraction averaged 10.3 percent in 2010, bringing in $749.5 million in state revenues. Additionally, the industry spent $1.49 billion in taxable sales and purchases. In 2010 natural gas brought in over $10.1 million in extraction taxes.

On the downside, it has been reported that as a result of the oil boom in North Dakota that "inadequate housing and crime" are emerging concerns for the state. In an investigative report on life in the town of Williston, the biggest Bakken boom down in North Dakota, journalist Mark Ebner writes:

"There’s not a motel room to be had in the city, housing prices are double what they were a year ago ($300,000 for a two-bedroom home), and the daily onslaught of new arrivals is reduced to living in their cars, RVs, sporadic tent cities or the rapidly proliferating “man camps” – clusters of trailers in an open field that pack in oil patch workers dormitory style, sometimes six to a room. Access to running water and simple sanitation is so rare that public businesses have had to lock their bathrooms to discourage makeshift sponge baths or the dumping of wastewater"

In April 2012 a study conducted by Headwaters Economics concluded it would be beneficial if the state of North Dakota funneled more oil and natural gas tax revenues to communities in the pathway of Bakken and hints at increasing the state tax rate on oil and gas development, which could in turn help these growing communities pay for roads, schools and other infrastructure. Currently North Dakota does not have the policies in place to reap the full economic benefits of the Bakken oil boom.

Forbes reported in November 2015 that only 4% of horizontal wells drilled since 2000 meet the Estimated Ultimate Recovery (EUR) threshold needed to break even at current oil prices, drilling and completion, and operating costs. Forbes repotred in November 2015 only 1% Of the Bakken play breaks at the November 2015 prices.

Petroleum geologists and Forbes analyst, Art Berman, conducted a study of the profitably of the Bakken formation Shale. The leading producing companies evaluated in his study are losing $11 to $38 on each barrel of oil that they produce, the companies evaluated were Continental Resources, EOG Resources, Hess Corporation, Marathon Oil, Statoil, Whiting Petroleum Corporation and XTO Energy, a subsidiary of ExxonMobil.

Continental Resources had net losses of $354 million in 2015.

Whiting lost $2.2 billion in 2015.

Citizen groups

• Bakken Watch

Resources

Related GEM.wiki articles

• United States and fracking
• North Dakota and fracking
• Montana and fracking

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• FracTracker

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