True to the storied tradition of the oil and gas industry, the Bakken shale play has gone from bust to boom.
Although oil was first discovered in 1951 in the Bakken shale formation (about 200,000 sq. mi. of the subsurface strata in the Williston Basin in Montana, North Dakota, and Saskatchewan), the hard-to access shale oil remained undeveloped for decades.
However, over the past four years new drilling technology has transformed the area into a major oil patch. By combining horizontal wells and hydraulic fracturing, exploration and production companies have increased North Dakota’s Bakken oil production from less than 3,000 barrels a day in 2005 to more than 230,000 barrels per day in 2010. New rock fracturing technology, available since 2008, has prompted a boom in Bakken production and made Williston basin, like other shale plays in Appalachia and Texas, a major focus for oil and gas investment.
In 2008 the US Geological Survey estimated that 3 billion-4.3 billion barrels of undiscovered crude oil could be recovered from the Bakken Formation. But like any oil boom, it is a high-risk, high-return business. While a conventional oil well in the Plains that taps oil at a depth of 3,000-4,000 feet may cost $300,000-$400,000 to develop, a deep Bakken well may cost up to $6 million to get up and running.
While new drilling technology has been the answer to producing the oil, it is the high oil prices that have provided the impetus to use the expensive technology.
Led by the Bakken activity, North Dakota’s oil production averaged over 460,000 barrels per day in September 2011, more than 4.5 times its September 2005 level. North Dakota now trails only Texas, Alaska, and California among oil-producing states. According to the Department of Mineral Resources, North Dakota oil production could reach as much as 750,000 barrels per day by 2015.
According to a recent news feature on NBC’s Rock Center, the town of Williston, North Dakota, has become a growth center for job seekers with the Bakken oil boom, creating thousands of jobs and spiking a demand for oil workers, truckers, teachers, doctors, police officers, restaurant workers, and others.
Bakken is big.
Photo by Lindsey Gee used under a Creative Commons license.