What is the Bakken Oil Shale Formation: An Introduction
Oil was first discovered here in 1951, but due to technical limitations, it has only been until fairly recently that any significant amount of oil has been recovered.
Although the total amount of oil contained in the Bakken shale could be several hundred billion barrels, the oil is trapped within the shale itself, and is consequently hard to extract.
In 2008, the USGS issued a report that estimated the total technically recoverable oil in the Bakken at 3 to 4.3 billion barrels. That’s obviously a significant amount of oil, but much less than what is most likely contained in the shale formation itself.
Recent developments in oil extraction technology have led to impressive increases in the amount of oil coming out of the Bakken. The key technology, hydraulic fracturing or “fracking,” has had the most significant effect.
At the end of 2010, the rate of oil production from the shale formation had increased to 458,000 barrels per day, which put a serious load on the local infrastructure’s ability to even ship the oil out of the region.
These recent increases in production have led some industry experts to conclude the original USGS estimate of 3 – 4.3 billion barrels as far too low, and they may be. More recent estimates have come up with figures as high as 24 billion barrels in technically recoverable oil.
Of course, the key to determining that amount of total recoverable oil is in determining what percentage is technically recoverable. Estimates of that have ranged from 1% to 50%, obviously a very broad range.
As with any subject involving vast sums of money, conflicts of interest can play a role in such assessments. The reports released by both the USGS and the state of North Dakota (presumably more objective sources) in 2008 would suggest that the lower range of percentage estimates are much more realistic.
Of course, the total amount of technically recoverable oil depends in large part on technology, and recent advances in horizontal drilling and fracturing have been responsible for huge increases in production.
In 2011, a senior manager at Continental Resources, which is one of the main players drilling in the Bakken region, stated that it could be one of the largest discoveries of the last 30-40 years. He based this statement on a total recovery of 24 billion barrels, which is obviously much more than the USGS and North Dakota reports. For more information on companies operating in the Bakken region, see our section on Bakken oil stocks and our post on bakken oil companies.
Aside from this manager’s obvious personal interest in making such claims, it is worth noting that he’s directly involved in production, and is probably intimately familiar with the real-world application of the technology involved. For instance, his company has developed a technology that allows the drilling rigs themselves to move hundreds of yards under their own power, increasing the rate of well drilling.
While it still remains to be seen what kind of longevity this formation has, and what the total recoverable oil will be, there is no doubt it is the most dynamic discovery currently under production in North America.
Bakkenoil.org is dedicated to providing the best resource of up-to-date information on the region, news, stocks and jobs. As the region develops, jobs are created, companies are purchased, and the oil flows, we will be there.
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If I wanted to invest directly in the Bakken companies how would I do so/ Is there a dividend program or other low cost
Robert, there is no dividend program or other mutual or index fund that I’m aware of. But, you can certainly invest directly in the companies involved. Check the right column of this site for the main oil drilling companies. Oil service companies involved in the Bakken, such as Halliburton, are also probably good bets.
Bakken Shale News, Updates, and Information
The Bakken Formation in North Dakota lies inside the borders of the Williston Basin. The Bakken is affectionately referred to as the “Pork Chop“ by folks in the industry. The USGS has estimated recoverable oil reserves in the Bakken and Three Forks Formations to be between 4 and 6 Billion barrels of oil. However, industry professionals peg the current recoverable reserves at approximately 24 Billion barrels with today’s technology. This is a staggering number but even more staggering is the projected original oil in place (OOIP) at 400-500 Billion barrels! The USGS is conducting more research and will be publishing their revised estimate in October 2013. Check this section regularly for news, updates, and information. Also, check out the other Bakken resources on this site such as jobs, hotels, and other resources.
TransCanada Changes Tune About Rerouting Pipeline That Will Carry Crude From The Bakken
I was originally very upset when the Obama Administration came out with the mandate that TransCanada reroute its pipeline out of environmentally sensitive areas of Nebraska. My main issue was because of the affect it could have on development in The Bakken. However, after the latest news from the CEO of TransCanada, it appears the delay is now a good thing.
Most people don’t realize that the majority of the steel for this pipeline is already on the ground in the United States – rusting. TC says they can start the building of the southern portion, from Cushing, OK to the Gulf Coast with shipper commitment and regulator approval. TC also says that the delay will allow them to generate enough cash flow to finance the project internally. Hopefully this means the shippers will eventually get reduced rates, which will decrease differentials and increase oil prices at the Wellhead! Although that is an optimistic outlook and could provide more tax revenue for the States if the differentials were reduced, it is not likely.
I guess I still don’t understand why TC is portraying this as a positive thing. If it’s so positive, why didn’t they delay it long enough in the first place to generate enough internal cash flow? I am not close enough to the issues in Nebraska to fully understand the potential enivornmental impact – I just know that pipelines are a very safe means of transporting bulk liquids and are needed to ensure an adequate supply of energy. In the mean time, the crude by rail concept will flourish and can hopefully provide enough reliable takeaway options for continued development of The Bakken.
http://www.shaleoilresource.com
http://www.thebakken.net