The Bakken Shale Formation of North Dakota, Montana, Manitoba, & Saskatchewan is the new hot area for oil exploration. Just when we thought there were no new giant oil fields to be found, Bakken Formation comes to life and also - though not the subject of this web page - so does the giant Carioca Oil Field of offshore Brazil. Maybe Peak Oil does not have us by the throat quite yet! There is still conventional oil to be discovered! Thank God, because some of the alternative energy sources are advancing in the wrong direction and others are advancing slowly at best. We desperately need the conventional oil that will come from the Bakken Formation and that provide us with a bridge until we can get alternative energy sources going..
The fact that the Bakken Formation contained a lot of oil has been known since the 1950's. But the price of oil was too low and the oil drilling technology not advanced enough to economically recover the oil. An oil price of at least $50 per barrel was needed to justify the cost of developing technology to recover the Bakken oil at a profit..
The present price of oil has now risen to such a level that the development costs can be covered and a profit made. The drilling technology to recover Bakken Formation oil involves vertical drilling followed by horizontal drilling, formation fracturing, and use of proppants. As the oil price continues to rise and as experience is gained in working the difficult Bakken shales, more and more of the Bakken oil can be efficiently recovered.
The oil companies are either already operating in Bakken or are on their
way. The Bakken oil rush is on! The Bakken shale formation has taken its place as a hot
oil prospect along with the other red hot natural gas prospects in the U.S. , e.g., the
Barnett Shale and the Haynesville Shale.
The present oil price has dropped to near the $50 per barrel mark and the
question arises as to whether there is much profitability presently in Bakken
operations. The question should be answered in the next few months.
L.C. Price, a geologist (or geochemist) working for the U. S. Geological Survey (USGS) is the person generally credited with determining the huge size of Bakken Formation oil reserves. In the 1990's, Mr. Price (working for USGS), performed an intensive investigation of the Bakken Formation oil field. Much of his work was done by chemically analyzing abandoned oil wells in the area. He made the surprisingly large estimate that the Bakken contained as much as 500 billion barrels of oil. His report was given to the USGS in 1999. Price died in 2002.
The Price report has never been released to the public. Its still a secret!
However, other geologists have, at least partly, confirmed Price's contention that there is a lot of oil in the Bakken Formation. The most noted of these geologic folks was probably Richard Findley who, after reviewing geological and seismic data from the field, presented his explanation of how previous drillers has missed the vast oil reservoir. They had drilled through it! Findley said the oil lay between two large shale layers which are the source rocks. A third non-shale layer of dolomite is sandwiched between the two shale layers and this center layer is apparently where the bulk of the oil is contained.....but do your own research if you are interested in the technicalities....I am not a geologist!
Findley had always had trouble finding deep-pocketed folks to invest in his geological ideas. But now Findley was able to get Lycos Energy of Houston to work with him. Apparently, Lycos brought in Halliburton to try horizontal drilling and fracturing to get to the oil. The work was a success in that Findley and his partners discovered the Elm Coulee Field in eastern Montana (in the Bakken Formation) in the late 90's. Since placed in production, the Elm Coulee Field has produced about 65 million barrels of high-quality oil. The Elm Coulee production figure constitutes about one-half the amount of oil that has been recovered from the Bakken Formation so far. Obviously, the major part of the Bakken Formation oil deposit has been barely touched.
Even after discovery and production of the Elm Coulee Field, development of the Bakeen Formation moved slowly. But it did move. And oil prices continued to rapidly rise. So now, a few years later, oil activity in the Bakken Formation has turned into a oil rush as oil company after oil company have begun to take aim at the Bakken Formation.
And what about the USGS? On April 10, 2008, they released an estimate for the Bakeen Formation of 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil. (That is an optimistic view.....some astute oil experts believe the USGS estimate is very much on the high side.) 4.3 billion barrels is a long ways from Price's original 500 billion barrel estimate but it is still a lot of oil.
So, we really don't yet have a good handle on precisely how much oil is in the Bakken Formation and how much is recoverable. But you can be assured that, as the price of oil continues to go up, this estimate of recoverable oil in Bakken will grow proportionally.
The overall concept of recovering oil from the Bakken Formation is relatively simple. You simply drill down vertically for about two miles until you hit the Bakken shale formation. You then drill horizontally along the shale formation for up to about two miles using fracturing techniques to "open up" the rock and injecting proppants to keep it open. Sounds easy but both the existing horizontal drilling technology and the existing fracturing techniques had to be advanced considerably before the technology would be effective in the Bakken Formation.
I don't work in the oil patch and I may be a little naive about the Bakken Technology. However, there are plenty of difficult shale formations elsewhere where some of the oil has been recovered in the past solely with vertical drilling. It would appear obvious to me that the advances made in directional drilling and fracturing for use in the Bakken Formation will be useful in some of these other difficult shale formations. (It should be noted that similar directional drilling/fracturing techniques are being used to produce natural gas from difficult shale formations, e.g., Barnett Shale, Haynesville Shale, etc.)
Obviously the work that has gone into producing the Bakken Formation is impressive. I strongly suspect that the principles of Project Management and Planning & Strategy played a major role. In any event, it is American innovation and technology at its very best! I hope they keep up the good work!
Maybe we will survive peak oil after all!
Please note that the oil companies mentioned in this section, by no means, constitute a complete list of Bakken oil companies. Things are moving too fast to know for sure all the companies involved. Additionally, many of the smaller oil companies reported to be active there have little public information published regarding their operations and little information on them is supplied on this web site. If you are looking for some of the small oil companies to invest in, you are going to have to do your own research.
Based on what I read , EOG appears to have an edge in technology on most of the large companies active there. EOG is drilling numerous wells there and appear to have a good handle on the drilling technology necessary to produce from the difficult Bakken shale formation. However, if you have a grudge against the old Enron company, you should know that EOG is an independent oil company derived from Enron. But I would not let that discourage you. EOG has an excellent reputation. Of course, their fine reputation has affected their stock price which has risen substantially in recent trading
Marathon Oil Corporation (MRO) is another large oil company involved in the Bakken Shale Formation. I believe they are setting up an office there.
As previously noted, a multitude of smaller oil companies are rushing into the Bakken area. These are probably the oil companies you can make the most money with.....if you know which company stocks to buy. Do your own research. A partial list of these small oil companies include:
Petrobank (PBEGF.PK)
Primary Petroleum
Whiting Petroleum Corp (WLL)
Brigham Exploration Company (BEXP)
Continental Resources (CLR)
Enerplus (ERF)
Crescent Point Energy Trust (CPGCF.PK)
Pennant Petroleum (PENFF.PK)
Continental Resources and Enerplus are not really that small with each company having a market cap of about $7 billion.
A recent development at Bakken is the discovery that an apparent prolific oil-bearing formation lies just under the Middle Bakken Zone. I say "apparent" because there is some question as to whether the discovery is really a separate oil-bearing formation or is drainage from the Middle Bakken Zone. Some of the Bakken companies are now aiming for this "formation" and the resulting wells are strong producers. The answer to the question as to whether this is a separate formation should be soon answered.
1. An unconventional play in the Bakken. A very professional article of Bakken shale formation prospects by Dave Cohen of the Energy Bulletin. Just as I was getting hopeful about the Bakken oil really helping with Peak Oil & the energy crisis, I read this article. Cohen notes that the technology developed for the Bakken formation is great but that oil production from the Bakken oil field will never be large enough to solve our energy problems.
2. The Bakken Trend: Lost Dutchmen Mine of the Oil Patch. From the blog "Seeking Alpha." Steven Ward is the author. Reviews just about everything you need to know about the Bakken formation . Ward even includes an investing approach for Bakken oil companies.
3. Bakken Formation - Wikipedia. Wikipedia is an excellent place to start research on the Bakken shale formation.
4. Bakken Oil Companies. The Bakken Formation is the hottest oil play in the U.S. today. Oil companies, particularly the small oil companies, are plunging into the Bakken oil rush and making good money there.
5. Oil & Energy Company Stocks. Oil prices are soaring and peak oil hasn't even arrived yet. The recent temporary decline in oil stock prices may make it a good time to invest in the oil companies.
6. Large Oil Company Stocks. The most stable of the oil stocks. Also, many of the major oil company stocks appear under-priced.
7. Small Oil Company Stocks. The most volatile of the oil stocks. A handful of Bakken Formation companies are listed. You can make money if you know which ones to pick.
8. Germany in World War 2. The German side of World War 2. The Germans had an fuel shortage and had to develop synthetic fuels. It worked fairly well but allied bombing finally caught up with the Germans and their energy crisis was largely responsible for their eventual defeat.
The Bakken shale Formation oil play is undoubtedly the hottest oil play going on in the oil business, today. There is a huge amount of oil in the Bakken Formation and it is difficult to recover. However, the energy companies have been very impressive in developing the necessary technology for extracting oil from the Bakken shale formation.
Disclaimer
This web site, titled Bakken Shale Formation Oil and the information included herein, is intended to provide information only and should not be construed as investment advice. The information provided is meant to broaden your knowledge and enable you to make better investment decisions within your portfolio.
Sometimes I give an opinion on the quality of an investment. This information is based solely on my own investment goals and investment needs and might not reflect your goals and needs and might not be an appropriate investment for your portfolio.
Please consult with your financial manager/consultant/accountant before actually purchasing any of the investments discussed herein.
Last Updated: 06/24/09
e-mail me @ vanc13@cox.net (Author: Van Cook)
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