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A new black gold rush is under way, this time in North Dakota. The potential payoff is huge -- up to 100 billion barrels of oil. That’s twice the size of Alaska’s reserves and potentially enough to meet all U.S. oil needs for two decades.
Until now, the obstacles to production seemed overwhelming. The crude oil is locked away in rocks that are buried miles underground in the Bakken Play, a field that stretches into Montana and Saskatchewan, Canada.
But times have changed. High oil prices and new technology make it worth the effort. Computer analysis and remote sensing systems, plus smart drills that can probe horizontally or snake left and right, vastly improve the odds of locating new pools and
putting them into production. And though oil is unlikely to remain priced at current stratospheric levels, prices won’t drop to much lower levels, which happened several times since the 1970s, and cause new exploration to dry up. Even if prices fell by half, many barrels of oil could still be produced -- profitably -- from the region.
An official government survey of the Bakken region's oil treasure trove is due out next month. The report is expected to play it very conservatively, because it will confine estimates to the amount of oil that likely can be produced profitably based on last year’s oil prices. It will also not take into account any further technological advances that might make it even easier to extract more oil.
"The Bakken is much like the enormous natural gas field that sat for many years under and around Dallas until people figured out the geology and how to drill it out economically," says Lucian Pugliaresi, president of the Energy Policy Research Foundation.
There's at least a smell of the "Old West" as petroleum companies rush to stake their claims in the Bakken Play. Marathon Oil recently acquired about 200,000 acres in the area and will drill about 300 oil wells within five years. Brigham Exploration and Crescent Point Energy Trust are also interested in some of the action. EOG Resources alone figures it can produce 80 million barrels of oil from its Bakken field.
Figure on at least five years before the oil starts flowing in large volumes. A lot of work will need to be done first. In addition to installing drilling gear, firms must build supporting infrastructure, including roads, pipelines as well as new water, sewage and sanitation systems to meet the needs of workers and other area residents.
Note that the Bakken Play region is not an environmentally sensitive area similar to Alaskan tundra that has stymied much oil field development because of concerns about damage to the fragile environment. Still, some environmental protests are sure to emerge and may gum up development for a while, but they’re unlikely to stop oil production from the Bakken fields.
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POSTED BY: Jim Ostroff (June 11, 2008 05:00 PM)
Kiplinger doesn't take sides on issues, but we do strive to incite people to think. This article surely has done that!
Since its publication, the U.S. Geological Survey released a report estimating there's up to 4.3 billion barrels of recoverable oil in the Bakken Formation. However, this was based on technology and oil prices in place during 2007. Still, this is a 25-fold increase over the USGS's 1995 study that concluded 151 million bbls. could be produced. It's very likely that the 2007 estimate will prove to be way too low, given continuing, rapid advancements in oil recovery technologies. This oil field will be developed over the next 10 to 20 years. There are no "killer" federal regs. that would prevent this.
An observation: During the past 30 years federal and state lawmakers have clashed repeatedly on the oil/natural gas versus renewables issue. As a result, vast areas in the U.S. and offshore that likely contain enough fossil fuels to boost domestic supplies for decades are off limits. At the same time, critical supports to help grow wind, solar, non-oil fuels and geothermal energy production remain meager and are doled out in a way that curtails much-needed private investment.
In the intervening years, the U.S.'s reliance on imported oil and natural gas has grown. The ability of the nation's power grid to handle growing electricity demand is breaking down in some areas, even with massive, utility-led conservation programs. In the spirit of inciting people to think: I submit that our nation's energy posture will become more precarious until federal and state lawmakers enact policies that permit and encourage the development of both fossil fuels and alternative energy sources, require more energy efficiency -- all without cutting corners on air/water pollution controls.
POSTED BY: A Thinking Person (August 06, 2008 01:15 PM)
Wow, have any of you "drill, drill, drill, " people really thought about how capitalism works in this scenario? I have a few questions that I can't seem to get acurrately answered- (it all seems to be opinion).
!. How is the price of oil set? Who puts it on what market and how are profits made and by whom?
--Many of you you seem to think that the oil that America drills is going to stay within the American market. From what I've been reading, I'm not so sure. Is there a law that says all American oil must stay in America? If not, can we make it a law? Will that cause others around the globe to limit their exports to us? Will it cause a feud?
2. Many comments on "decades of oil" and how "someone" will figure out a new source, "someda"y.
I've lived almost 5 decades. Since I started driving in the 70"s during the first "gas crisis" I have been aware of the gas mileage on cars and bought accordingly. I've lamented the fact that American car manufacturers weren't looking to the future re: polution, the lack of oil someday, or the fact that one simple war in an area of high oil production(Iraq?) could cause an oil deficit and high gas prices again. If we have only decades of oil and so far 3 have gone by in my lifetime, that means by the time my kids are in their 80's (60 years from now) what will they do? If, in 30 years, we've been putting off the inevitable switch to renewable cleaner fuels, when will America get behind itself for America's future.
- oil needs to be saved for our military, our medical and other essential needs other than gas for our transportation needs. Talk about greedy Americans!
3. When someone budgets, they take into account what they are paying now ( and usually with a bit of a cushion). The fast increase of gas and food that has not allowed paychecks to catch up is not the fault of the working person. It is just happenstance that the economy has shifted as a result of the oil cost rise that has affected all of us. Especially those in rural areas where getting to work requires a car. And don't tell me that it's that easy to sell in this market to buy a place closer in. I'm glad Max has handled it so far. I hope he doesn't lose his health care or has to pay more of it personally which would cause a sudden hardship on him and possibly make his budget out of whack. I hope that he doesn't have a health crisis that he has to pay a lot out of pocket and causes him into bankruptcy. People need to walk in another's shoes for a while before they they get on a high horse. Maybe try living on minimum wage and supporting a family. Then, I'll take your comments seriously.
POSTED BY: avery heavenrich (December 04, 2008 03:26 PM)
Whether the oil stays in the United States or not is irrelevant only global supply and demand actually matter. Secondly forecasting the future about true global oil reserves has not been a liberal green forte(ie the club of Rome(sort of like the Aspen institute only international)predicted world oil supplies would peak and exhaust themselves in ten years. That was in January of 1970!
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