Vast U.S. Oil Reserve Could Spur Independence

Getting oil out of the rocks that lie far beneath North Dakota’s plains is a lot closer to reality.

By Jim Ostroff, Associate Editor, The Kiplinger Letter

August 6, 2009

North Dakota as an oil patch state? Yes, probably in a decade or less. The state’s Three Forks-Sanish formation could rival nearby Bakken Play, a vast oil shale field. Together they could hold 200 billion barrels of oil, about four times Alaska’s entire oil cache. That’s enough black gold to provide the equivalent of 30 years’ worth of U.S. oil needs at current usage levels, without having to import one barrel from abroad.

Oil companies are scurrying to stake claims to the bonanza that’s been lying untouched for decades beneath the northern Great Plains. No -- oilmen weren’t shooed away by ham-handed federal regulators. It’s just that the oil was nearly impossible to extract because it’s buried nearly two miles underground, and even if a well were sunk in the center of the field, crude wouldn’t gush out. The oil isn’t in subterranean pools, but is locked up in soft rock that until recently had to be mined like coal or aluminum ore.

New drilling and recovery technologies developed during the past decade make the fields ripe for production. Drills that can be steered in any direction bore in from the sides of hills covering land that formed a great inland sea millions of years ago. Production is done by fracturing the rock in place, literally shocking it to liquefy the oil for pumping into local storage tanks, and later, into pipelines.

Getting oil from a stone has gone way beyond lab tests. Brigham Exploration Co. and Whiting Petroleum Corp. already are producing a few thousand barrels of oil a day at Three Forks-Sanish. Other petroleum companies in the hunt include ConocoPhillips, Continental Resources Inc., Encore Acquisition Co., EOG Resources, Hess Corp., Kodiak Oil & Gas Corp., Northern Oil & Gas Inc. and XTO Energy Inc.

Alaska and Texas will remain the hubs of U.S. petroleum production for a while longer, at any rate. Though drilling has begun, full-scale commercial production at Three Forks-Sanish is five years away. The sticking point is infrastructure. Ramping up to production to several hundred barrels a day will require construction of roads, electrical and water supply lines, oil storage tanks and pipelines.

This isn’t the only domestic oil bonanza waiting to be developed. Tar sands similar to Canadian fields contain around 75 billion barrels of oil. They’re located mainly in Utah, Alaska, Texas, California, Alabama and Kentucky. The Outer Continental Shelf ocean beds, situated 50 to 100 miles off the coasts of the Atlantic Ocean, the Pacific Ocean and the Gulf of Mexico, hold around 90 billion barrels of oil. But unlike the North Dakota field, most of the land in these areas is off-limits to mineral development because of federal and state prohibitions.

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