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PN Bakken: Bakken reserves to jump
Petroleum News Baaken ^ | 4-15-12 | Ray Tyson

Posted on 04/28/2012 4:49:16 AM PDT by Recon Dad

USGS next recoverable oil estimate expected to double to 8 billion barrels

Ray Tyson

Petroleum News Bakken Editor

The U.S. Geological Survey, in a highly anticipated report to be released next year, is expected to at least double the amount of oil reserves that can be recovered from the U.S. portion of the massive Bakken play in North Dakota and Montana. This is the consensus of company executives and industry consultants interviewed by Petroleum News on the sidelines of the 2nd Annual Bakken Investor Conference held April 2-4 in Minot, North Dakota.

April 2008 was the last time the USGS reported on the immense play, estimating it held from 3-to 4.3 billion barrels of undiscovered, technically recoverable oil in an area generally known as the Bakken formation. The study estimated mean undiscovered volumes of 3.65 billion barrels of oil, plus 1.85 trillion cubic feet of associated-dissolved natural gas, and 148 million barrels of natural gas liquids. That estimate represented a 25-fold increase in the amount of oil that could be recovered compared to the agency’s 1995 estimate of 151 million barrels of oil.

The Upper Devonian-Lower Mississippian Bakken formation is a thin but widespread unit wit in the central and deeper portions of the Williston basin that in addition to Montana and North Dakota, include the Canadian provinces of Saskatchewan and Manitoba. However, USGS reserve estimates on the Bakken are limited to U.S. territory.

The Bakken reserve estimate of 2008 was larger than all other USGS oil assessments of the lower 48 states and was the largest continuous oil accumulation ever assessed by the USGS. A “continuous” oil accumulation means that the resource is dispersed throughout a geologic formation rather than existing as discrete, localized occurrences, according to the USGS. At the time, the next largest continuous oil accumulation in the United States was the Austin Chalk of Texas and Louisiana, with an estimated 1 billion barrels of technically recoverable oil.

The next Bakken reserve update was to begin in October 2011 and take two years to complete, depending on project financing, according to the U.S. Interior Department.

Drilling, fracking more advanced

But a lot of Bakken oil has gone to market since the 2008 USGS reserve estimate. For one, more well data is available for analysis. Back then information was gleaned from just a few hundred producing wells, compared to thousands of wells that have since been drilled and put on line. Moreover, the technologies of horizontal drilling and shale fracturing, which made the Bakken oil boom possible, are far more advanced. Therefore, the USGS 2013 reserve estimate is expected to be around 8 billion barrels or more of technically recoverable oil, depending on whether additional oil zones, such as the Three Forks, located below the Bakken formation and sourced by the Bakken, is included in the next reserve assessment, according to industry leaders.

“That’s what I’m hearing based on new data that’s come in on the wells that have been drilled,” Laura Erickson, an industry consultant and head of Williston, North Dakota-based Plains Energy Technical Resources, LLC, said of the 8 billion barrels reserve projection. “There have been a lot of development areas; new fields that have been developed; and plenty of wells that have been drilled.”

“I think there are a lot of people who think that (8 billion barrels) is reasonable,” Terry D. Hildestad, president and chief executive officer of MDU Resources Group, told PN, noting that production from his company’s last eight wells was up more than 40 percent from wells MDU drilled a year earlier.

“I mean that is phenomenal,” Hildestad added. “That’s because we’re getting better at understanding the geology, the fracking and all of that stuff you do in a well. And that’s not unusual. That probably happened in Alaska and to a lot of other oil plays. People get smarter and get better.”

Recovery rate is 3-6%

Moreover, the Bakken is in a relatively early phase of development, with a paltry 3-6% recovery rate of all the oil in place. However, once in-field drilling begins in earnest, and enhanced recovery techniques, such as CO2 injection and water flooding, are employed, the Bakken’s ultimate oil reserves could reach well beyond the 2013 estimate of 8 billion barrels. Marty Beskow, executive vice president of Voyager Oil & Gas, pointed out that many operators have been drilling single wells on a typical 1,280-acre spacing unit in order to secure mineral rights to their leases while booking some reserves. However, he said, each unit could ultimately support five wells in the Bakken alone and another five in the Three Forks, for a total of 10 wells per unit.

“I don’t know whether the study will include Three Forks estimates,” Beskow said of the 2013 USGS study. “But both of them should be increasing because of those technology advances and just being farther along the learning curve. For each well that an operator drills that’s another piece of information they didn’t have before. I believe the estimates for the Bakken and Three Forks will be higher on whatever number they come up with.”

Geological and engineering consultant Kathleen Neset, president of Neset Consulting, came to North Dakota 33 years ago as a geologist with Core Laboratories. She’s known as the “Godfather of the Bakken.”

More rock, more reservoir

“I’ve seen people coming up with even larger numbers” than 8 billion barrels, depending on how much of the Three Forks formation is included in the USGS study,” she said. “You add more rock to the reservoir, you add more reserves. But keep in mind that the entire system is sourced by that Bakken shale. Even the Three Forks is sourced by that same rock.” The USGS will include both the Bakken and Three Forks formations in its 2013 assessment.

“The more we know about the geology, the more robust and accurate the assessment can be,” Stephanie Gaswirth, USGS task chief of the Williston basin assessment, was quoted as saying in the April 7 edition of the Dickinson Press.

The USGS did not study the Three Forks formation in its 2008 assessment, Gaswirth added, telling the newspaper, “at that point, there was little activity in the Three Forks, and there has been quite a boom in the Bakken and Three Forks. There’s a lot of new information both geologic and production wise.”

TOPICS: Business/Economy; Miscellaneous
KEYWORDS: bakken; energy; oil
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To: saganite
Thanks for the ping!

They'll re-revise the estimates again in the future, it keeps the studies coming. At the same time, in all fairness, they generally tend to lowball the estimates.

I've been doing these wells since 2000, and some of the early ones exceeded their theoretical yields at 10% recovery, so recovery rates assumed may well be too cautious. Better to guess you have less and find out you have more than the other way around.

21 posted on 04/28/2012 7:38:33 AM PDT by Smokin' Joe (How often God must weep at humans' folly. Stand fast. God knows what He is doing)
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To: Errant

There is an old, made new again play due to new technology, called the Tuscaloosa Trend, just kicking off

I became aware of the TT back in 1976 while living in Louisiana. I read a story on a geologist (cannot remember his name) who used to work for Exxon but went out on his own. Did all the leg work to plot it and began leasing everything he could.
The interesting thing I remember of the article was that based on projections if the TT played out he’d be one of the richest men in the world. I think he lived in Baton Rouge.

22 posted on 04/28/2012 8:09:19 AM PDT by Recon Dad (Gas & Petroleum Junkie)
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After a few generations of dryland farming, brutal winters, and finally having a chance to cash in on mineral rights they have retained through thick and thin, the locals here tend to be a little less than sympathetic toward people from outside the area who have decided they know better than we do how to care for our own environment.

The Buffalo Commons people were more or less sent packing back to New Jersey (in the '80s), and other groups have met little sympathy (Go back to LA or San Francisco or New York City and clean that mess up, if you want to be environmentalists: this area remains as it is because we have kept it that way without any 'help'.)

And we deal with the greed and envy from the parts of the State (2/3) without oil, who are losing their stroke in State politics because we are the ones bringing home the bacon.

Most of the mineral rights are in private hands, and neither environmentalists nor the Federal Government have been able to come up with an adequate excuse to shut things down, despite their best efforts.

23 posted on 04/28/2012 8:18:46 AM PDT by Smokin' Joe (How often God must weep at humans' folly. Stand fast. God knows what He is doing)
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To: Recon Dad
I remember one of the wells they drilled in the TMS shale back in the 70’s. It went straight down to around 20,000’ (no horizontal tech in those days). It produced high pressure gas and they almost lost control of it. An area with a radius of 2 miles had to be evacuated. It was finally capped due to low volume but some say it was because there was no way to get it to market. I remember the well sign lying in a rubbish pile (after millions and millions had been spent on drilling); something, something Wild Cat... I wish now I had saved it...
24 posted on 04/28/2012 8:28:39 AM PDT by Errant
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To: strongbow
Fischer Tropsch was the formula to breakdown hydrogen and carbon monoxide under steam.

The competing process was the Bergius Hydrogenation process was deemed the of the two, because they could make aircraft fuel with Bergius. Both processes used coal.

Someday I suspect they will probably will come up with a cheap syn fuel.

25 posted on 04/28/2012 8:28:58 AM PDT by Recon Dad (Gas & Petroleum Junkie)
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To: Errant

Yeah I do remember that the depths were way below anyone was drilling at the time. The main body of the trend ran west of Baton Rouge to Texas.

26 posted on 04/28/2012 8:32:56 AM PDT by Recon Dad (Gas & Petroleum Junkie)
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To: Recon Dad

Polk County Texas Monster Chalk Well - 14.5 mmcfd gas and 2,900+ barrels of liquids

Also, will probably interest you, since you once lived in the area and keep up with what's going on.

27 posted on 04/28/2012 8:37:27 AM PDT by Errant
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To: Recon Dad

It extends into Mississippi. Actual TMS vertical wells in that part of Louisiana and activity in the Florida parishes.

28 posted on 04/28/2012 8:40:22 AM PDT by Errant
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To: Recon Dad

A factor in determing recoverable reserves is the price of oil. Increasing oil prices increase recoverable reserves.

29 posted on 04/28/2012 8:40:25 AM PDT by monocle
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To: monocle
A factor in determing recoverable reserves is the price of oil. Increasing oil prices increase recoverable reserves.

It is a factor but in the present case it's been ingenuity and science in the form of fracturing and horizontal drilling. We're getting much better at finding it through new techniques also.

30 posted on 04/28/2012 8:58:51 AM PDT by Recon Dad (Gas & Petroleum Junkie)
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To: Errant

Thanks good reading, lots of knowledgeable people on the site.

31 posted on 04/28/2012 9:01:28 AM PDT by Recon Dad (Gas & Petroleum Junkie)
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To: monocle
The more I thought about it the more I agree with you price probably drives the boat as much as anything else.

When you look at history and the major discoveries in the past in a lot of cases price per bbl was in the toilet, but they still ran all over the world to hunt for the next big elephant.

32 posted on 04/28/2012 9:07:20 AM PDT by Recon Dad (Gas & Petroleum Junkie)
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To: Recon Dad

In natural resources there is a difference between a deposit and an ore body with the ore body being a deposit which can profitably be exploited. In a different point of view look at proposed green energy projects, which have high technology content, tax breaks and government subsidies, and yet go into receivership because their products cannot be sold at a profit. Furthermore, many high technoloy companies outside the energy sector fail every year.

33 posted on 04/28/2012 9:16:57 AM PDT by monocle
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To: Recon Dad
A few years back during the height of the Haynesville Shale leasing frenzy, companies were paying as much as $30,000 an acre for 3/4's rights. Lots of land owners turned down $10,000 an acre offers. Unfortunately, prices for leases have really fallen along with the price of NG.

To survive, Haynesville Shale companies are moving into formations that also have liquids like TMS, Austin Chalk and Eagle Ford.

In the last few months, all of the players have become extremely secretive about this play. I'm not sure what that means...

34 posted on 04/28/2012 9:58:27 AM PDT by Errant
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To: Errant; Recon Dad

With enhanced recovery techniques - fracking, etc - it seems there are more “Elephants” than anyone ever thought there would be.

I love technology.

Besides the fact that humans have souls, it is the only other thing that sets us apart from animals.

35 posted on 04/28/2012 10:38:38 AM PDT by abb ("What ISN'T in the news is often more important than what IS." Ed Biersmith, 1942 -)
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To: abb
I love technology.

We can embrace it; increase our knowledge of it or go back to living with the animals in the forests.

I'm guessing, without Divine intervention, we're on our way back to another "dark age", since we seem to have lost the ability for rational thought and long range planning.

I assume God is way ahead of us... :)

36 posted on 04/28/2012 10:59:13 AM PDT by Errant
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To: Recon Dad
I believe as the infrastructure expands to move product into areas where there's no NG now and we start exporting LNG the prices will rise and the prices will level out.

No less savvy a corporation than Exxon-Mobil is counting on just that, so it's a good bet that NG prices will rise. All the chumps who bring a bunch of gas turbine power plants online will then be a large captive market to the delight of the gas pushers.

37 posted on 04/28/2012 6:25:51 PM PDT by mvpel (Michael Pelletier)
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