The Bakken Shale, the now-famous shale deposit ranging from Saskatchewan down to North Dakota and Montana, gets its name from North Dakota farmer Henry Bakken, who was the land owner when the shale was discovered in 1951.
The oil from this deposit had been unimportant and unattractive throughout the years—gas prices were relatively low and the costs of drilling wells was too high.
But in 2008, oil prices surged over $140 a barrel, and at that point, BakkenShale.net reports, oil companies began leasing land in North Dakota.
Modern technology also made its stamp on the oil industry around that time, and with new developments in fracking and horizontal drilling, oil production that was too difficult or even impossible ten years ago is achievable today.
And there’s no end in sight. In fact, the state of North Dakota is now a land of prosperity—the second largest U.S. oil producer behind Texas—and it has the lowest unemployment rate in the nation, at 3.2% as of December 2012.
In addition, the nearby Three Forks formation is also in early stages of exploration. Experts are still unclear if it is just an extension of the Bakken Shale or another reservoir all together.
Bakken Shale reports:
A 2008 USGS study pegged recoverable reserves at approximately 4 billion barrels and a 2010 NDIC study estimates the underlying Three Forks formation could yield an additional 2 billion barrels. Both estimates are likely conservative. The Bakken is estimated to hold as much as 400 billion barrels of oil equivalent in place. Four billion barrels only represents 1% of the oil estimated to be in place, while current recovery estimates range from 3-10%. Continental Resources has publicly expressed beliefs the Bakken will yield anywhere from 24-40 billion barrels.
The Bakken Shale boom started when Lyco Energy (now Enerplus Corp. (NYSE: ERF)) and Halliburton Company (NYSE: HAL) partnered up to uncover oil-rich shale through horizontal drilling.
The risk eventually paid off with innovative and ground breaking techniques, and starting in 2003, companies large and small began to show interest.
Today, Continental Resources Inc. (NYSE: CLR) is the largest acreage holder in the Bakken Shale with 1,139,799 net acres. Its proved reserves increased 54% in 2012 to 785 million barrels of oil equivalent (BOE), 72% oil, as Oil & Gas Journal reports. With this increase, Continental has had a 45% improvement in proved reserves per year since the end of 2009.
Continued growth and development allowed the company to produce 35.7 million BOE in 2012, 58% more than in 2011. The fourth quarter of 2012 marked Continental’s 19th straight quarter in which it showed increased production, Oil & Gas Journal says.
Continental has also expanded operations into the third bench of the Three Forks—a zone generally untargeted by operators. 2013 will see a program that will develop 14 wells throughout the region.
Kodiak Oil & Gas (NYSE: KOG) is another major operator in the Bakken oil field with 155,000 net acres and 7 drilling rigs that are worked 24 hours a day.
The company also has several non-operated wells awaiting completion and expects production to far exceed the 12,500 BOE/d it saw in March of 2012, as OilShaleGas.com reports. Kodiak expects roughly 27,000 BOE/d by year end.
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Whiting Petroleum Corporation WLL (NYSE: WLL-A) had 233 wells throughout the region at the start of the 2012.
Whiting is continually adding acreage, holding 98,836 gross acres (57,762 net acres), and plans to release drilling results when the leasehold target has been met, stated in OilShaleGas.com.
Oasis Petroleum (NYSE: OAS) is also making significant strides in the Bakken. The company increased production to 17,633 BOE/d in the first quarter of 2012, up from 15,243 BOE/d in the fourth quarter of 2011—a 16% increase.
And during the first quarter of 2012, Oasis saw a 118% production hike as compared to their first quarter 2011 results. The number of operated wells is steadily increasing.
From OilShaleGas.com:
“At the end of March 2012, the company had 91 operated wells connected, up from only three operated wells that were connected at the beginning of 2012.”
These are just some of the major players vying for supremacy in the Bakken Shale. It is uncertain what the future will hold, even for companies with the biggest stakes in the region. One thing is for sure – there is no sign of slowing down, and with promising production every day, it’s hard to say who will come out on top.
This game is just getting started.
