Skip to comments.Dakota's Oil Fields Turn Farmers into Millionaire Drillers
Posted on 07/06/2008 7:41:37 AM PDT by STARWISE
John Bartelson, who smokes Marlboro Lights through fingers blackened with tractor grease, may look like an average wheat farmer. He isn't. He's one of North Dakota's new oil barons.
Every month, he gets a check for tens of thousands of dollars from a company in Houston called EOG Resources Inc., which drilled two oil wells on his land last year. He says the day his first royalty check arrived was one to remember.
"I smiled to beat hell, and I went to town and had a beer," Bartelson, 65, says.
His new wealth springs from the Bakken formation, a sprawling deposit of high-quality crude beneath the durum wheat fields of North Dakota, Montana and southern Saskatchewan and Manitoba. The Bakken may give the United States -- the world's biggest importer of oil -- a new domestic energy source.
Unlike the tar from Canada's oil sands, Bakken crude needs little refining. Swirl some of it in a Mason jar and it leaves a thin, honey-colored film along the sides. It's light -- almost like gasoline -- and sweet, meaning it's low in sulfur.
Best of all, the Bakken could be huge. The Geological Survey's Leigh Price, a Denver geochemist who died of a heart attack in 2000, estimated that the Bakken might hold 413 billion barrels. If so, it would dwarf Saudi Arabia's Ghawar, the world's biggest field, which has produced about 55 billion barrels.
The challenge is getting the oil out. Bakken crude is locked 2 miles (3.2 kilometers) underground in a layer of dolomite, a dense mineral that doesn't surrender oil the way more porous limestone does. The dolomite band is narrow, too, averaging just 22 feet (7 meters) in North Dakota.
The USGS said in April that the Bakken holds as much as 4.3 billion barrels that can be recovered using today's engineering techniques. That's a fraction of the oil that Price said should be there, but it's still the largest accumulation of crude in the 48 contiguous U.S. states. North Dakota, where Bakken exploration is most intense now, won't become Saudi Arabia unless technology improves.
For decades, the Bakken was the fool's gold of the oil industry. The name describes a geological formation that looks like an Oreo cookie: two layers of black shale that bleed oil into the middle layer of dolomite. It's named after Henry O. Bakken, the North Dakota farmer who owned the land where the first drilling rig revealed the shale layers in the 1950s.
All of the layers are thin -- about 150 feet altogether -- and none of them give up oil easily. In older, vertical wells, oil would often flow for a month and then fizzle.
Now, companies like EOG are drilling horizontally. They go straight down 10,000 feet and then put a slight angle in the mud motor, a 30-foot piece of tubing that drives the bit, so they hit the Bakken sideways, making a horizontal tunnel as much as 4,500 feet long through the dolomite. Then they pump pressurized water and sand into the hole to fracture the dolomite, making cracks for oil to seep through.
It eventually winds up in a pipeline that runs east to Clearbrook, Minn., and then south to Chicago.
Several billionaires are at work in the Bakken. Harold Hamm's Enid, Okla.-based Continental Resources Inc. has leases on 487,000 acres in Montana and North Dakota. Hamm, who started out driving a truck, owns 73 percent of Continental, worth $7.9 billion. Philip Anschutz, 68, founder of Qwest Communications International Inc. and Regal Entertainment Group, is there, too.
The big winner so far has been EOG, formerly a subsidiary of bankrupt energy trader Enron Corp. It drilled a horizontal well in western North Dakota just north of Parshall -- population 1,028 -- in April 2006. The well came online a month later and kicked out 1,883 barrels in the first seven days. Unlike the older vertical wells, it's still going.
Northern Oil & Gas Inc., a five-person company near Minneapolis, makes money without drilling or operating wells. It leases in promising areas like the Bakken and gets paid when someone else uses the land to drill.
The other people doing well in the Bakken are the mineral owners under the oil wells -- folks like John Bartelson. Oil drillers have paid them millions for right of access to the oil deposits.
Bartelson's checks are about to get bigger. One more EOG well just came online, he says, and another is about to be fractured with water. Still another has been permitted for drilling. For now, he's farming. The oil market is fickle, he says. Previous crashes drove the rigs out of North Dakota for years, leaving only the wheat.
"It'll crash again," Bartelson says, sipping on a late- afternoon cup of coffee beside his tractor.
Maybe so. But with crude trading above $125 a barrel, it'll be a long time before the rigs leave again, and John Bartelson is likely to be a wealthy man before they do.
Not if Harry and Nancy have anything to do with it.
Yes, all this IS bad news for the Montana prairie seal.
Also, the area mentioned is in the Newtown area, which is the thickest part of the entire field (Williston Basin) and is not a good example of the overall fields potential.
Harry? Harry, is that you?
That much money not going to OPEC sounds good to me. Every dollar that stays here helps us.
Well, we tap the Bakken and whatever else is legal and force Congress to open up offshore and ANWR. 150,000 bpd here, a million there, and so on, and pretty soon, you’re talkin’ real oil.
I haven’t seen one of those bumper stickers in a while. I never understood who considered oilfield hands “trash”. They always made pretty good money compared to most other working men, and they certainly earned their pay.
There’s also “Oilfield Trash And Proud Of It”.
Actually being dubbed “Oil Field Trash” was sort of a badge of honor.
Sort of like when I was a Freshman and a self respecting cowboy in college and had “GDI” (Gawd Dang Independent)plastered on my textbooks letting the world know that this cat wasn't a sand dipping, ice cream britches wearing Frat Rat.
I understand the Montana penguins won’t be affected.
Better than being a Democrat.
I just want to be able to drive around with a bumper sticker that says:
“Don’t blame me for the crap this country is in I voted for Ron Paul ‘08!”
That would be the current crop of pantie waisted cowardly run and hide Democrats led by the stupidest leaders in the history of America in Nancy Peloser and Hairless Read.
That would be them.
But this bunch is dead set against domestic drilling, and they sure don't want a farmer making money off of oil. They will tax North Dakotans as much as they can.
"No windfalls for you!"
That’s the total truth.
Incredibly nice. Clean, very low crime rate, like-minded family-oriented people, for the most part...but expensive with a capital “E.” Three bedrooms on a postage stamp will set you back $350,000-$400,000 and rent on a two bedroom apt. is about $1100-$1500/mo...It’s a “boom-town.”
Lots to do, with the mountains and a lot of lakes close by. Some of the best whitetail and muley hunting anywhere in North America...I miss it a great deal - I live in the socialist paradise of Ontario now, unfortunately.