May 1, 2013 in Business

Oil potential expands in Dakotas, Montana

Sean Cockerham McClatchy-Tribune
 
File photo

Kevin McLeod, formerly of Coeur d’Alene, stands near the flare pit of a drilling operation in Williston, N.D., in March 2012. Williston is near the oil-rich Bakken formation.
(Full-size photo)

How oil is recovered

To capture oil from shale formations, companies drill down nearly 2 miles then angle the well sideways for about another 2 to 3 miles. A pressurized concoction of water, chemicals and sand is injected to break open oil-bearing rock, which allows the oil to flow to the well.

That technique, known as hydraulic fracturing or fracking, has elevated North Dakota from the ninth-biggest oil-producing state just six years ago to second, trailing only Texas.

Associated Press

WASHINGTON – The federal government is doubling its estimate of how much oil might be discovered and harvested in the booming area of the Dakotas and Montana, a region already helping drive the United States’ dramatic shift into the world’s next top oil producer.

“These world-class formations contain even more energy resource potential than previously understood, which is important information as we continue to reduce our nation’s dependence on foreign sources of oil,” Interior Secretary Sally Jewell said Tuesday in a conference call.

The surge comes primarily because of the Three Forks shale formation, which lies mostly in North Dakota and crosses into South Dakota and Montana. It was considered to have little potential for productive drilling the last time federal geologists launched an estimate of the area, four years ago. But advances in drilling techniques and growing oil company activity led the U.S. Geological Survey to look closer.

The USGS now thinks the Three Forks formation contains 3.73 billion barrels of undiscovered and technically recoverable oil. Combined with a similar figure for the neighboring Bakken formation, it represents double the oil and nearly triple the natural gas that geologists thought the region held four years ago.

“The Three Forks was the big unknown,” said Brenda Pierce, the Energy Resources Program coordinator for the USGS. “There’s been tremendous development in the Bakken, but the Three Forks is up and coming.”

Intense development of the Bakken formation has transformed North Dakota in recent years. North Dakota even passed Alaska last year to rank just behind Texas as the second leading oil-producing state in America. The oil is in shale rock and is recovered by horizontal drilling and hydraulic fracturing, a controversial process known as fracking, in which highly pressurized water and chemicals are injected underground to break through the rock and free up oil and gas.

Just because oil and gas are technically recoverable doesn’t mean it’s necessarily economical to drill at this point. But drilling is exploding in North Dakota. And Jewell said the new estimates for the Three Forks and Bakken formations would help companies and the government decide how to develop them.

“Foreign oil imports now account for less than 40 percent of oil consumed in America,” Jewell said. “That’s the lowest level since 1988.”

“The whole purpose was to get more private investment in western North Dakota, more houses, hotels and businesses,” U.S. Sen. John Hoeven said. The North Dakota Republican also said the assessment would help lead to less dependence on foreign oil.

“This is good news for our state and our country,” Hoeven said.

The new assessment estimated that 5.8 billion barrels could be recovered in North Dakota and 1.6 billion barrels in Montana. Estimated South Dakota production was near nonexistent, according to the study.

The International Energy Agency forecasts that the United States’ domestic energy boom will allow it to overtake Saudi Arabia as the world’s leading oil producer by about 2017.

Saudi Arabia’s oil minister, Ali al-Naimi, said Tuesday that he welcomed the United States’ new bounty into the global oil market. But he said it wouldn’t mean an end to America’s “so-called” reliance on foreign sources of oil.

“I believe this talk of ending reliance is a naive, a rather simplistic view. Talk of energy independence fails to recognize the interconnected nature of the global energy markets,” he said in an address at the Center for Strategic and International Studies, a research center in Washington.

America will still use a range of energy sources to meet domestic demand, al-Naimi predicted. A better question than whether America is energy independent, he said, might be whether the United States starts allowing exports of its crude.

“We are all part of a global market, and no country is truly energy-independent,” al-Naimi said.

The Associated Press contributed to this report.


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