USGS Bakken assessment. Behind the numbers: a closet optimists’ perspective

FactSheet_2col v 3.5.1In April 2013, the United States Geological Service released its most current assessment of the Bakken and Three Forks formations. The long and short of the analysis was that the total amount of recoverable oil in the Bakken and Three Forks formations is roughly double that of earlier projections for oil, and nearly triple the previous natural gas estimates. For many, this finding is no surprise as private-sector assessments indicate that even the new numbers released by the USGS are more than likely on the low side of what will eventually be recovered from the Williston Basin. For those who read behind the numbers, however, the assessment included some rather interesting information that may be a window into the real potential of the basin.

For the most part, reading government reports is akin to watching the movie Out of Africa three times back-to-back in a foreign language (unnecessarily long, incredibly boring, and you don’t understand the majority of what is being said).

However, by looking behind the numbers in the 2013 “Bakken Assessment”, a couple of very interesting points make reading the report worthwhile for anyone interested in the future economic prospects of the region. In the report overview, for example, the USGS lists six reasons for conducting the 2013 assessment—all of which combined paint a far more optimistic future than the one portrayed by the 2008 USGS press release (which, by the way, was 25 times more that the estimate provided in 1995). The actual numbers listed in the report have been reprinted in a wide variety of articles over the past couple of months. But from one perspective, the reasons for doing the report may be even more interesting than the numbers themselves.

In 2013, the USGS was able to view “longer well-production histories” throughout the formations. As any scientist in any field would attest to, a longer data history will almost always produce more accurate numbers. Thus, the USGS logically understood that an assessment at this point in time would rely a bit more on real numbers and a bit less on guesswork. In addition, an increased knowledge of the formations themselves provided an increased level of certainty of agency predictions. Added to this more accurate base of understanding was five additional years of technological advancement capable of greatly increasing recoverability rates throughout the basin. Overall, the USGS 2013 assessment of the Bakken was a positive picture of long-term potential and an exceptional economic outlook for the region.

Despite the fact that current USGS estimates are double those of earlier projections, it still falls well short of independent assessments of the Bakken potential. Although the independent assessments, like the USGS reports, are subject to a variety of shortcomings, the companies that perform them are trained and paid to make accurate determinations of the real potential of a formation. With that in mind, some independent assessments have published estimates of recoverable oil in the Bakken and associated formations to be north of 30 billion barrels. Even if no one can precisely predict just how much oil, gas, and gas liquids are recoverable from the Williston Basin, the fact remains that for the foreseeable future, economic growth in the region will continue to escalate at an unprecedented rate.

For the companies that are currently in the production or direct support end of the energy business, however, the USGS report did not add much to what is already known and widely accepted. So why is it important to write an article embracing the base elements of the report? Because during the same time-frame that this report was released, several other articles were released that paint an entirely different picture. For example, Forbes released an article on the 13th of June of this year explaining why America’s shale oil boom is actually a short-term proposition. In fact, in the world of energy prognostication, the future is anything but peaches and cream. According to the Forbes article, economic “malaise” will spell the end of American shale oil. Still others in this camp accept the assertion that shale oil will continue to be listed long-term as an unconventional fuel source with little political, economic, or ideological viability. Yet, those that continue to advance this dim view of the U.S. energy future do so based on indicators that ignore the big picture perspective. To this crowd, the Bakken is little more than a passing boom, with an impending bust just around the preverbal corner.

Even so, the truth revealed in the USGS report is that the corner is not as close as some may think. And since it is always easier to move the tracks before the train is sitting on top of you, there is still time to take action. The question becomes, do we buckle up for the ride or chart a new course into the future? If, as a nation, we chose to believe that the Bakken is only a boom, then even history will not tell us how many barrels of oil were actually held within layers of the Bakken shale. Thus the incontestable significance of the 2013 USGS assessment is not found as much in the numbers as it is in the hope it provides for the potential of a prosperous energy future. The fact is that the Bakken will remain a significant source of energy for decades to come if, as a region, we champion energy as an economic driver rather than a victim of a weak economy. If we find ways to streamline operational logistics, leverage economies of scale, and rigorously facilitate advances in technology, the Bakken opportunity will prove to be even greater than the 2013 predictions.

The USGS Bakken report may not tell the whole story, but it is a window to the future if we are willing to explore the implications to what lies beyond the numbers in the immediate here-and-now. One thing that the USGS Bakken report did not discuss, for example (and rightfully so), is that (according to the U.N. News Center) the global population is headed to 9.6 billion by the year 2050. More than half of that growth will be in underdeveloped nations. In addition, over two-thirds of the world’s current population centers are scrambling to modernize at an unprecedented pace. Yet working alone, local, state and national governments are powerless to meet the growing demand for infrastructure, a greater level of subsistence needs, necessary public services, technological advances and the energy to make it all happen. As a result, the private sector must take steps now to prepare for an unprecedented influx of people, industry, and urbanization. It is imperative, therefore, that all sectors of community and industry come together in a collaborative effort for the mutual benefit of both (paraphrased from the “United Nations Development Program,” n.d.).

The USGS Bakken Assessment may not tell the whole story, but the whole story remains unwritten. The part of the story it does reveal is of billions of barrels of oil and an excellent rationale for continued development in the region. Perhaps the greatest take-away from the report, however, is not its recognized increase in barrels of oil, but rather in the question that the report leaves unanswered.

What will this region and this nation do with this extraordinary opportunity? Will we listen to the ruminations of ruin; or will we rise to the challenge and create a common vision that leverages this opportunity in a manner that prospers both the energy industry and community for generations to come?

View the assessment here.

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