Does the Bakken formation have enough oil for the world?

With an oil price bubble forming in the futures market, will the Bakken oil formation help alleviate high prices? In aggregate, the Bakken formation has been estimated to hold between 271 and 503 billion barrels of oil. The Bakken tends to produce light sweet crude, the highest available quality of oil, which is much more energy-efficient and environmentally friendly to produce than tar sands oil.

Bakken oil formation has industry gushing

Bruce Johnstone, Saskatchewan News Network

Published: Monday, December 10, 2007

Saskatchewan could be sitting on 25 billion to 100 billion barrels of sweet, light crude oil in the Bakken formation in the southeast part of the province, according to industry and government estimates.

By comparison, the heavy oil resource in west-central Saskatchewan, which is considered to have great potential for future production, is estimated to be 25 billion barrels of oil in place.

The huge potential of the Bakken play has industry and government officials gushing with superlatives.

Dancsok of Saskatchewan Energy and Resources. "It's probably the biggest oil find in Saskatchewan since the 1950s."

"The Bakken is the hottest play in Western Canada," said Trent Stangl, manager of marketing and investor relations for Crescent Point Energy Trust of Calgary, one of the top three players in the Bakken in Saskatchewan.

Gregg Smith, vice-president of Canadian operations for Petrobank Energy and Resources, another Calgary company with a large land position in southeastern Saskatchewan, goes one further. "It's fair to say, the Bakken play is the hottest play in North America," Smith said.

What has government and industry observers so excited is the sheer magnitude of the Bakken formation, which is found in the Williston Basin underlying much of North Dakota, eastern Montana, southeastern Saskatchewan and southwestern Manitoba.

The Bakken is a geological formation of siltstone and sandstone about 300 metres below the Mississippian formation, where most Saskatchewan light oil production comes from. Bakken wells tend to be highly productive (200 barrels a day or more), producing sweet, light crude oil with 41 degree gravity, basically the highest grade of crude oil you can find anywhere.

While relatively new in Canada, Bakken exploration has been underway in the U.S. since 2000 and has increased dramatically in recent years. According to the U.S. Geological Survey, the Bakken formation could contain a mind-boggling 413 billion barrels of oil in place.

Exactly how much of that Bakken oil in place is in Saskatchewan is a matter of some conjecture.

Fifteen years ago, the then-department of Energy and Mines estimated there was roughly 100 billion barrels of oil in the Bakken formation throughout the entire Williston Basin.

Dancsok, who co-authored the 1991 study, said the prevailing view in the geoscience community at the time was "the potential of the Bakken was immense, but the price of oil in 1991 was not such that people wanted to risk (exploration and development dollars)."

Dancsok estimated roughly 25 per cent of the Williston Basin, which covers some 200,000 square miles (518,000 square kilometres) is located in Saskatchewan. Based on that simple arithmetic, the estimate of Bakken oil in the province could range anywhere from 25 billion barrels to 100 billion barrels of oil in place.

Of course, geology isn't that simple.

"Whether the Bakken is evenly distributed throughout the basin is one question," Dancsok said. "It is deeper in North Dakota. But is the distribution of Bakken oil equal in Saskatchewan to North Dakota or Montana? That's a big question mark."

Smith says it's difficult to estimate how much oil is in the Bakken formation in Saskatchewan, but suggests that three to four billion barrels of oil could be in place in the area (22 townships) where Petrobank and other companies, like Crescent Point and Tristar, are active.

"This is very much a resource play," Smith said. "There will be other Bakken discoveries. This play will expand."

Source: Saskatoon StarPhoenix

Bakken most improved - Oil and Gas Investor

In a report analyzing drilling activity and well results for various oil and gas shale plays around the country, "Resource Chronicles," Jeffcries & Co. analyst Subash Chandra has ranked the plays.

His "most improved" title goes to North Dakota's Bakken oil shale. "Several operators will increase their rig count in 2008, in contrast to most other plays. EOG Resources, Hess Corp. and Marathon oil...will each run eight rigs in 2008, compared with six [last fall]," he reports.

The key event in this play was EOG Resources' extension in 2007 of its Parshall Field nine miles north of its primary acreage. EOG's Austin 1-02H flowed 2,000 barrels per day, making it the best well in the play so far. As a result, EOG estimates its sweet spot has increased fourfold to about 80,000 acres.

Lease prices in Mountrail County have risen to as much as $2,150 per acre. This is comparable to what operators pay in some of the gas shale plays.

The Fayetteville shale in Arkansas made the greatest leap forward in 2007, he reports, in terms of well results and technical advancements. In second-quarter 2007, play leader Southwestern Energy Co. announced two wells with initial production rates of 5 million a day. And, the company's 75 wells that were put onstream in the third quarter had an average horizontal length of 2.613 feet, some 24% longer than at the start of the year.

Chesapeake Energy Corp. raised its estimated ultimate recovery (EUR) for the Fayetteville, saying its wells could recover 2 billion cubic feet rather than 1.6 billion. It is testing wells on 40-acre spacing and a few pilots only 500 feet apart.

Chandra sees "the blistering pace" of drilling in the Barnett shale tlattening out in 2008 as operators focus on capital efficiency in the face of lower gas prices and higher costs. "We suspect production growth will be much more modest in 2008 and beyond than in 2007. Our back-of-the-envelope suspicion is that the play will deliver less than 0.5 billion cubic feet a day of volume growth...."

The leasing pace may not slow down, however. "Bidding is feverish for urban and suburban plots. Companies like Chesapeake and XTO Energy are paying record prices to neighborhood associations for the right to drill."

-Leslie Haines

29 Days...

That's how long it took a barren stretch of land from Montana through North Dakota, known as the "Bakken," to catapult from a forgotten region...to America's hope for energy independence. The incredible story behind the largest oil find in US history has plastered itself across every major financial outlet. It's been featured everywhere from CNBC and Fox News to The Wall Street Journal. Every one of them is getting excited for the same reason we are...there's a massive deposit right under the frozen soil -- so large -- it could meet America's oil demand for the next four decades. But here's what they don't tell you... Thanks to certain technological advancements (and three very special companies), these reserves just created a new generation of wealth for savvy American investors. 5.3X the proven reserves of Exxon, Gazprom, Chevron and ConocoPhillips combined... Twice the size of Saudi Arabia's Ghawar oil field... To get right to the point... It's the largest domestic oil discovery since Alaska's Prudhoe Bay and has the potential to eliminate all American dependence on foreign oil. The Energy Information Administration (EIA) estimates it at 503 billion barrels. Even if just 10% of the oil is recoverable... at $107 a barrel, Montana is looking at a resource base worth more than $5.3 trillion. For years, U.S. oil exploration has been considered a dead end. Even the "Big Oil" companies gave up searching for major oil wells decades ago. However, a recent technological breakthrough has opened up the Bakken's massive reserves... and we now have access of up to 500 billion barrels. And because this is light, sweet oil, those billions of barrels will cost Americans just $16 PER BARREL! That's enough crude to fully fuel the American economy for 41 years straight. To America, this discovery couldn't have come at a better time. You see, when all the wells are finally drilled and pumping, we won't have to import any foreign oil from the Middle East. Not a single drop! For investors like you and me, it offers a "once-in-a-lifetime" chance to profit on ever-rising demand for oil. And we can do it by getting in on the groundfloor of the next great oil boom... Even the US Government has confirmed the Bakken as a huge oil formation. The government's own Energy Information Administration (EIA) issued this press release: Oil in the Bakken isn't gritty, dirty and expensive like the Alberta oil sands. We're talking light, sweet crude oil - the least expensive and easiest to refine oil out there. It's true that the oil industry has known about the Bakken Basin for over 20 years - but the problem always was that no one knew how to get at the oil. The technology just wasn't there. Until now...

History of Bakken Oil Generation Estimates

A landmark paper by Dow and a companion paper by Williams (1974) recognized the Bakken as a tremendous source for the oil produced in the Williston Basin. These papers suggested that the Bakken was capable of generating 10 billion barrels of oil (BBbls). Webster (1982, 1984) as part of a Master’s Thesis at the University of North Dakota further sampled and analyzed the Bakken and calculated hydrocarbon generation capacities to be about 92 BBbls. This data was updated by Schmoker and Hester (1983) who estimated that the Bakken was capable of generating 132 BBbls of oil in North Dakota and Montana. Price (unpublished) used a more complete database and estimated that the Bakken was capable of generating between 271 and 503 BBbls of oil with an average of 413 BBbls. New estimates of the amount of hydrocarbons generated by the Bakken were presented by Meissner and Banks (2000) and by Flannery and Kraus (2006). The first of these papers tested a newly developed computer model with existing Bakken data to estimate generated oil of 32 BBbls. The second paper used a more sophisticated computer program with extensive data input supplied by the ND Geological Survey and Oil and Gas Division. Early numbers generated from this information placed the value at 200 BBbls later revised to 300 BBbls when the paper was presented in 2006.