The US Geological Survey (USGS) ignited the Williston Basin oil boom in 2008 with its assessment of over two billion barrels of recoverable oil from the Bakken field but gave made no assessment of America’s Three Forks field to the south. The USGS just announced that its 2013 survey doubled its 2008 estimates for combined shale oil and recoverable natural gas deposits in the Bakken and Three Forks areas of the Williston basin to 7.4 billion barrels of oil and 6.7 trillion cubic feet of natural gas. The USGS survey results are expected to dramatically increase oil and gas investment in the region.
As the sole provider of publicly available geologic-based estimates of undiscovered and technically recoverable conventional and “continuous” oil and gas resources in the United States, the just-released USGS 2013 survey estimates that the Three Forks, with a recoverable assessment of 3.73 billion barrels, is larger than the Bakken formation with its assessment of 3.65 billion barrels. By comparison, the second-largest continuous oil accumulation in the U.S. is the combined resources of the Eagle Ford Shale and Austin Chalk in the Western Gulf Basin of Texas and Louisiana, which is assessed at just 1.7 billion barrels of oil.
The USGS assessment determined that the Three Forks field, which is located entirely in the U.S., ranges from 1.5 to 7 times thicker than the Bakken field, which straddles the U.S. and Canada. The Three Forks “pay zone” is consistent with wells recently drilled in the Three Forks area that achieved “pay-back” on investment in just seven months versus over a year in the Bakken area.
U.S. oil and gas reserves come from source rock formations. Conventional oil and gas resources gradually migrate away from the source rock into pooled formations that can be drilled vertically. But “continuous” resources remain trapped within thermally mature, organic-rich shale that remains in or adjacent to the source rock with minimal migration. Continuous accumulations are referred to as “shale oil” or “tight oil,” depending upon whether the oil and gas is produced from the shale itself or from adjacent tight reservoirs. Continuous accumulations are “regionally extensive,” and hydrocarbons are extracted by drilling down vertically, then drilling horizontally to hydraulically fracture the area to expose a greater surface of the reservoir rock to stimulate oil and gas flow.
The first Williston basin oil deposits were discovered in the early 1950s. Over the next 50 years, about 150 million barrels of oil were produced from the Bakken formation with vertical drilling practices. But in the past decade, production in the Bakken was augmented by use of horizontal drilling combined with hydraulic fracturing. Production from wells in North Dakota and Montana rose from 24,000 barrels per day in 2004 to 937,263 barrels per day in April of 2014.
To recover the continuous oil deposits in the Williston basin, the USGS estimates it will require drilling at least another 40,000 wells. At the 2012 rate of drilling, it will take 20 or more years to develop and recover the oil.
In addition to this oil bonanza, the latest USGS assessment estimates that the Bakken and Three Forks contain 6.7 trillion cubic feet of recoverable natural gas and 0.53 billion barrels of recoverable natural gas liquids, an 81% increase over the 2008 estimate.
There has been very little natural gas drilling and oil wells in North Dakota “flare-off” gas due to lack of transport pipelines. But the largest holder of gas rights in the Bakken field is Exxon Mobil Corporation, which in 2010 acquired XTO Energy in a $41-billion deal that made Exxon the largest natural gas producer in the United States.
In September 2012, as the USGS was just beginning its assessment, Exxon boosted its holdings by 50% to 600,000 acres after it paid Denbury Resources $1.6 billion for 100% of its properties in the Bakken shale. Exxon has said that it plans to increase capital spending by $7 billion to $8 billion a year, with a significant amount going toward “unconventional plays” in the U.S., including the Bakken field, according to a January 20, 2013 article in Petroleum News.
The media has been full of naysayers regarding the size and sustainability of America’s energy boom. But the doubling of the Williston basin assessment will accelerate what has already been a huge investment boom in shale oil. With a mammoth player like Exxon tying up huge tracts of the Bakken field, America’s shale oil boom is about to be joined by a new natural gas boom.
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