At the end of June 2009, crude oil prices were about $70 a barrel. Dire predictions were that prices may rise to $250 a barrel in the mid-term, within a year and a half. These ideas were sparked by reports that proven oil reserves have fallen, a drop attributed partly to reduced exploratory drilling and confirmed by a 0.6% reduction in global consumption to 81.8 million barrels per day in 2008.
Note that gas use rose 2.5% globally (up 16% in China), coal use rose 3.1% (up 6.8% in China), while renewables only generated 1.5% of global energy use, over half of that from hydroelectric. Note also that Congress has been saber rattling for years to restrict domestic fossil energy production in favor of green whatever, inhibiting reality and national needs. Then along came a series of developments that most folks have not heard about, and it is good news.
Locals call it “the Bakken.” Discovered in 1953 and located in eastern Montana, southwest North Dakota and southern Saskatchewan, it covers 200,000 square miles, between shale layers, and averages 130 feet thick. The Bakken formation contains sweet crude, not shale oil, which contains kerogen and must be removed and refined to make crude oil. This enormous deposit resides about 10,000 feet deep in dolomite formations between shale layers.
While porosity and permeability are low in the recovery strata, new horizontal drilling and fracturing technology makes this formation a profitable prospect capable of providing billons of barrels of good-quality petroleum. It has been explored but used minimally over the past 55 years.
It was recently reassessed by the U.S. Geological Survey (USGS) in April 2008. According to the USGS, with available technology Bakken adds many billions of barrels of petroleum to U.S. reserves. But some curious features surround the subject, including wildly inflated reports of recoverable reserves and conspiracy theories about lack of production. This raises a point. In the Internet age and with what seems a large number of screwballs with an ax to grind, it is always necessary to check facts and vet information sources.
From 1974 through 1999, when most exploration was completed, study of Bakken petroleum reserves done by public and private experts kept mounting. First it was 10 billion barrels (BB) in 1974, 92 BB in 1982 and 132 BB in 1983. In a 1999 study by USGS chemist Leigh Price, who spent most of his life exploring Bakken, total content of reserves ranged from 271 to 503 BB with a mean value of 413 BB.
The North Dakota Department of Mineral Resources concurrently estimated the Dakota portion at 167 BB. Content, however, is not the issue. Recoverable content and, further, the economics of recovery are important. What is certain is that Bakken is the largest “continuous oil accumulation” in the lower 48 states, meaning that oil is dispersed throughout the entire formation and does not exist as discrete and localized occurrences.
The next known largest continuous deposit spans Texas and Louisiana (Austin Chalk) with 1 BB of recoverable oil. Estimates of economically recoverable oil range from 1-50%. Therefore, Bakken is significant and a strategic “game changer” in the world energy supply. It is a multi-trillion dollar asset for America, and it has the capacity to change world political dynamics that are so heavily influenced by energy supply, location and price. It is virtually impossible to know the impact Bakken developments have on OPEC, but it is obviously the biggest event to impact members since cartel formation.
It appears that two key technologies make production of Bakken petroleum cost effective and efficient. These are horizontal drilling and precisely controlled fracing of the formation.
Directional drilling is now in common use. In fact, vertical depths to 30,000 feet with 30 to 40 branches from the main stem to distances of thousands of feet from the bore are expected by year-end.
Newly demonstrated fracing methods can operate at as much as 10,000 psi differential at 400°F and repetitively expand a wellbore while injecting fracing fluids that “stage” enlargement of bore diameter. A past problem with fracing has been overstimulation that triggers water incursions into the bore and bore failures at weak points along the stem. Unstimulated Bakken horizontal wells have not been economical, but this new “StackFrac” drilling system heralds a winner, something that aids U.S. energy independence for decades to come and, if handled properly, could assist political and economic stability worldwide.
American industry needs sources of reliable and affordable energy, and Bakken is a major development to aid that happening. Keep an eye on what evolves here, and please remind your Congressional politicians to back off and not interfere with a hair-brained carbon tax and mandated “green” stuff that costs a bundle and doesn’t solve the problem. IH
The Importance of Bakken
August 4, 2009