Research says more oil in area
The U.S. Geological Survey has released an assessment of the Bakken Formation, which stretches across 25,000 square miles from northeastern Montana across northwestern North Dakota and up into the southern region of Saskatchewan.
The last USGS study, completed in 1995, estimated the Bakken Formation had 150 million barrels of undiscovered technically recoverable oil. Thirteen years later, the new assessment estimates 3.65 billion barrels of undiscovered technically recoverable oil, 25 times greater than the 1995 assessment.
The Bakken Formation is encountered throughout the greater Williston Basin which underlies most of North Dakota, eastern Montana, northwestern South Dakota and southern Saskatchewan and Manitoba, Canada. The Bakken Formation comprises three layers located approximately 11,000 feet below the surface in the depocenter of the basin. The oil is trapped in a layer of dense rock which can now be accessed through horizontal drilling.
Many area residents are not surprised at all by the news. “It’s not surprising,” County Commissioner Don Steppler says. “I think the only people who would be surprised are the people in North Dakota and outside Richland County.”
Fellow county commissioner Mark Rehbein agrees. “I don’t know why it’s a surprise,” Rehbein said. “The last one was estimating 400 billion, this one is actually down…but it is wonderful.”
Rehbein is referring to a study that was being conducted by USGS organic geochemist Leigh Price. The 1995 USGS assessment did not account for one large technological factor that has since been developed – horizontal drilling.
With only vertical drilling, most of the oil in the Bakken was unrecoverable. The development of horizontal drilling prompted a new study of the Bakken Formation conducted by Price. Price’s estimates ranged from 271 to 503 billion barrels of technically recoverable oil at the time of his death. However, due to Price’s death and the low price of oil in 2000, $10 a barrel, the study never received a scientific peer review. The USGS assessment released Thursday is the only official USGS study since 1995. Even with the USGS stamp on the Bakken as the largest oil accumulation in the lower 48 states, Tim Lechner, senior operations engineer for Headington Oil, has his reservations. “I think they have overstated their reserve potentials,” Lechner said. “They are assuming that every square mile will produce as good as the best well. That has not been and never will be the case.”
Rich Pollastro, a geologist for the USGS who worked on the Bakken assessment, said, “Our assessment is of ‘undiscovered, technically recoverable resources,’ not economically recoverable resources. It will take tens of thousands of wells with ‘success’ and ‘failure’ to produce the resource we have estimated.”
Technically recoverable resources are those which can be recovered using today’s technology if cost were not a consideration. Whereas, economically recoverable resources is what resources can be recovered without financial loss to oil companies taking into account the price of oil and the cost of drilling and maintaining wells. A horizontal well can cost anywhere from 25 to 300 percent more to drill and complete than a vertical well with the same target. Current estimates for the cost to drill and complete a horizontal are between $4 million to $5 million.
In 2007, the Elm Coulee Field alone produced over 18 million barrels of oil out of the total 20.1 million barrels of oil produced in Richland County.
Steven G. Grape, with the oil and gas office of the U.S. Department of Energy, said, “If this [the USGS assessment] bears out, the Bakken Formation, which would include Elm Coulee Field and others such as the Parshall Field in Montrail County (N.D.), would indeed be the largest discovered resource within the Williston Basin.”
Montana Board of Oil and Gas division administrator and petroleum engineer Tom Richmond is glad that the USGS finally got the assessment completed, saying that people have been waiting. When asked what difference the assessment might have on the northeastern Montana oil industry, Richmond responded that he wasn’t sure things could get much busier.
“They [the assessment] attributed reserves to areas that have not shown to be active, so it will be interesting to see what will happen there,” Richmond said. “Because there’s not a great abundance of leases left where it is active.”
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