By Chris Faulkner, President & CEO, Breitling Energy Companies
To paraphrase Mark Twain, reports of the Bakken formation’s demise have been greatly exaggerated.
Earlier in the year, naysayers were wringing hands and sounding the death knell for the Bakken based on falling rig counts and wrong assumptions. As noted in the Spring 2013 Bakken Oil Report, well counts were actually on the rise, and the ever-evolving science of oil exploration and production was already showing that the Bakken had more surprises in store for us.
Yet, industry focus shifted away from the Bakken and Eagle Ford plays with the astonishing new estimates of 30 BBO in the Cline. Remember, though, that the Cline was quiet until recently, when higher oil prices paved the way to serious investment in developing the region.
Then, sure enough, the United States Geological Survey (USGS) issued its latest assessment of the Bakken, and the Bakken’s future is looking brighter. According to the USGS April news release, the Bakken and Three Forks formations contain twice the recoverable oil as the last USGS estimate in 2008 (a total of 7.38 BBO), and three times more natural gas and natural gas liquids than the previous estimate (6.7 trillion cubic feet of natural gas and 0.53 billion barrels of natural gas liquids).
This isn’t the first time the Bakken has outperformed the estimates and projections. In 1995, the USGS estimated 151 million barrels of recoverable oil, but adjusted its estimate in 2008, putting the figure at 3.65 billion barrels of oil.
The USGS estimates are on the conservative side, of course. Continental has put the number as high as 30 to 35 BBO for Bakken and Three Forks combined.
Who knows what the next USGS assessment might reveal?
Fully Accessing the Bakken Will Take Money, New Technology
Certainly it depends on advancements in drilling technologies and techniques. The April USGS assessment was enabled by increased drilling in the Williston Basin, providing much more data than was previously available to the USGS.
With both WTI and Brent prices on the rise, and America’s refining and transportation infrastructure starting to come up to capacity to handle the oil and gas boom, the industry is well-positioned to make the necessary investments in exploration and drilling to develop promising formations like the Bakken and Three Forks.
Higher oil and gas prices will be critical. The shale oil and gas boom that began in 2008 was possible because oil and gas prices were high enough to make the investments necessary for increased production profitable.
Take the western edge of the Bakken, for example. Situated under the Fort Peck Indian Reservation in Montana, where the Bakken is a few thousand feet shallower and is interrupted by the Brockton-Froid Fault, its existing wells have brought up more briny water than oil. Though the Fort Peck tribes are courting oil companies for lucrative leases and hoping that their piece of the Bakken will prove a valuable producer, that region will require considerable investment, and perhaps more advanced technologies, if Fort Peck’s dreams of prosperity and sovereignty are ever to come to fruition.
With Fort Peck’s existing wells producing more oil than water, its prospects for serious investment may seem poor, but keep in mind the fact that the Three Forks Formation was once thought to be unproductive. The new Three Forks estimates are a direct result of commercial development made possible by advances in fracking, horizontal drilling and micro-seismic imaging.
Economics Favorable for Investments, Advancements
Technologies in development and early stages of use now may well hold the keys to further unlocking the treasures within the Bakken. For example, Baker Hughes and Schlumberger have begun using new “super fracking” techniques to create longer, deeper cracks for increased well production. Baker Hughes is also trying to cut the fracking timeline with disintegrating balls in place of the standard plastic balls that can get stuck and cause delays.
New and improving C02 and hydrocarbon techniques are also expected to help address some of the peculiarities of the Bakken. One such oddity about the Bakken that can cause headaches for operators is the Bakken’s oil-wet rocks, which react differently to conventional fracking techniques. Instead of drawing oil to the well, water injected into oil-wet rock formations can drive the oil away. The EIA is so optimistic about the prospects for C02 in solving this issue that it expects a growing trend toward C02 over the next few decades.
Technical and geological uncertainties may be casting a shadow over the potential of the Bakken in the minds of some of the more pessimistic, but the economics are looking good and history, especially recent history, has shown that where the economics are good, the technological advances will follow.
About the author: Chris Faulkner is the founder and CEO of Dallas-based Breitling Energy Companies, the holding company of Breitling Oil and Gas and Breitling Royalties, which he also founded and serves as CEO. The companies are in the oil and natural gas exploration, production and investment business. Faulkner’s diverse and extensive background in the oil and gas industry in North America, Europe and the Middle East covers all aspects of oil and gas operations, including project management, production, facilities, drilling and business development. Faulkner serves as an advisor to the ECF Asia Shale Committee and sits on the North Texas Commission Board of Directors.by