The question remains: How much oil is left to pump?

The question remains: How much oil is left to pump?

Aug 16

Oilfields turn out 9 million barrels a month; estimates of what’s left differ

By Stephen J. Lee – Forum Communications

How much oil does North Dakota have encased in rock formations two miles below ground?

About 9 million barrels less than a month ago, a wag might say.

That’s how much oil is being pumped out every month, a record pace in the 60th year of the state’s oil production.

But relatively recent increases in the estimates of how much oil there is to pump have fueled excitement over the economic potential for the state.

A cluster of oil-pumping units straddles a road north of Killdeer. Photo by John Steiner, Jamestown Sun

Until three years ago, the official estimates of recoverable oil in the state were pegged at a few hundred millions of barrels, including an estimated 151 million barrels in the nowlegendary Bakken formation, according to the U.S. Geological Survey.

The Bakken formation lies within the Williston Basin, which underlies 200,000 square miles, two-thirds in western North Dakota with parts in eastern Montana and southern Saskatchewan and Manitoba.

But in the spring of 2008, the USGS came out with an electrifying new estimate, pegging the Bakken at 3 billion to 4.3 billion barrels of recoverable oil, about 2 billion of it under North Dakota.

The Bakken was described as one of the largest single reserves of oil in the United States.

A year ago, Lynn Helms, director of the state’s department of mineral resources, announced that the geological formation lying directly beneath the Bakken, known as the Three Forks-Sanish formation, also appeared to hold lots of oil.

This spring, Helms said the Three Forks under North Dakota had about 2 billion barrels of recoverable oil, a doubling of the Bakken’s potential that could extend the state’s oil play by a decade or more.

Harold Hamm, head of Continental Resources in Enid, Okla., is even more bullish, saying this spring at a conference in Bismarck he thinks the Bakken and Three Forks could produce a total of 8 billion barrels of oil.

But some, including Don Kessel, a Belfield native who is vice president of Murex Petroleum in Houston, one of the leading producers in North Dakota, think those estimates are too optimistic.

What is ultimately recovered from the Bakken and Three Forks, they say, will be substantially less than 4 billion barrels.

Others point out that even if North Dakota could produce 4 billion barrels of oil in the next 10 to 20 years from the Bakken and Three Forks formations, that isn’t a game-changer for the industry. U.S. consumption of oil totals about 7 billion barrels a year.

Deep-water off-shore oil reserves in the Gulf of Mexico and off the coast of Brazil are far larger.

Still, there’s little doubt that the Bakken and Three Forks production will mean 20 years or more of sustained development and economic benefit to the state, Helms says.

In the first 60 years of the state’s oil industry, a total of nearly 1.8 billion barrels of oil have been produced.

The figurative barrel of oil, the common measurement used in the industry, contains 42 gallons.

Of course, much depends on the price of oil. After prices hit a record near-$150 a barrel in mid-2008, they fell to about $30 by early 2009.

That slowed production, and fewer than 40 rigs were drilling in North Dakota for a time in 2009. That number has more than quadrupled this summer as prices largely have remained at $65 to $75 a barrel.

Early oil estimates

How much oil a geological formation generates is far greater than how much of that oil can be recovered, based on technology and the price of oil.

Wallace G. Dow, a 1964 graduate of UND’s geology department, made history in the early 1970s when his research on the Bakken formation, done for Amoco Oil, for the first time demonstrated how the type of rock in a geologic formation would produce a certain kind of oil.

He gave the paper first at a conference in Denver in 1970, Dow said from his home near Houston. where he still works in the oil business for EOG Resources, the largest oil producer in North Dakota.

In 1974, his paper was published in the oil industry’s leading journal and still is cited as precedent-setting, said Julie LeFever, geologist with the North Dakota Geological Survey and keeper of the state’s core sample library.

Dow figured the Bakken formation had generated 10 billion barrels of oil. But at the time, there was no economical way to get the oil out of the “tight” formation, using the technology of the times.

Dow, in fact, while working for Amoco in 1967, was the geologist on the first oil well that drilled down into the Bakken, he said.

That was before horizontal drilling was perfected in the state, and the vertical well produced 735 barrels a day, but closed down after about six months, Dow said in a recent interview.

There was no known way in 1967 to drill horizontally along the Bakken and fracture the rock formation to keep the oil flowing.

In the 1980s, geologist Leigh Price estimated the Bakken formation had generated 300 billion to 500 billion barrels of oil.

LeFever said she thinks the total oil generated in the Bakken is closer to 200 billion barrels.

The question of how much of that “oil in place,” could be recovered is debated. Estimates based on current technology suggest that 1 percent to 2 percent of the oil in the Bakken is recoverable.

Helms says if progress in oil drilling technology improves the next 10 or 20 years similarly to the way it’s improved the past 20 years, it’s not unreasonable to wonder what the state’s oil production might become.

In some oil producing regions, 10 percent or more of the oil is recovered. North Dakota’s Bakken is considered less amenable to drilling than most areas. But even if the percentage of oil recovered moves up to 3 or 4 percent of the total oil in place, that would effectively double the state’s production, Helms says.

And the Bakken already is rockin’, as the ubiquitous caps and T-shirts say, with annual production setting a string of records: 63 million barrels in 2008, 80 million last year and 100 million barrels a possibility this year.

Lee is at slee@gfherald.com