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November 12, 2010

North Dakota Oil Production 341384 Barrels per day in September and companies are buying up land in Alberta Bakken

1. North Dakota set an oil production record for the each of the first eight out of nine months of the year in 2010. North Dakota Oil Production 341384 Barrels per day in September 2010.

North Dakota is close to double the production from two years ago.

2. There is another new shale oil play that is getting ready to explode onto investors’ radar early in 2011 – the Alberta Bakken.

Located on either side of the Alberta/Montana border, the key land packages in this play have been assembled with very little news or fanfare – but by some very smart and successful companies, like Crescent Point (CSCTF.PK) in Canada, and Rosetta Resources (ROSE) , Newfield Exploration (NFX) and Murphy Oil (MUR).



The Alberta and North Dakota/Saskatchewan Bakken plays have completely different geological settings, huge land prices have been paid for big parcels of Alberta Bakken land in areas where truly, very little is known about the oil formations

On the Canadian side, land prices around the Montana border edged up consistently this year – going from a low of $83 per hectare ($33.20/acre; 2.5 acres in a hectare) to $1535/ha, or $614 per acre – taking a lot of industry people by surprise at the time. The highest price paid for one small block was over $4500/ha, or $1800/acre. Crescent Point came clean in September when they announced they had acquired over 1,000,000 acres in the play, mostly via an acquisition of a private company, Darian, which had a substantial land position, but also through some freehold staking on their own. Most of the land in the area was bought up by land brokers, a whole sub-industry in the oilpatch that acts as front-men for the oil producers. That is not unusual.

3. Companies are aiming to apply technology learned from the Bakken to geologically similar shales in China, France, Poland, Canada and in some U.S. states, including Wyoming, Utah and Colorado.
Initially developed to exploit gas shales, horizontal drilling and hydraulic fracturing were first used in North Dakota early in the decade. They flopped.

"The first attempts were failures, but by mid-2006 we had the first successes," Helms said.

The Bakken, which ranges from a few feet thick to 80 feet, is sandwiched between layers of loose shale. Its rock consists of sandstone and siltstone, with microscopic pores that contain the oil.

To capture the crude, companies drill down nearly two miles then angle the well sideways for about another two miles. A pressurized concoction of water, chemicals and sand is injected to the horizontal portion of the well to break open oil-bearing rock. Fissures, held open by injected sand or ceramic materials, provide a pathway for oil to flow to the well. So-called fracture stimulation can be done a dozen or more times at each well.

Marathon intends to use techniques learned from the Bakken to develop similar formations around the world, including in Poland where the company holds an interest in more than 2 million acres atop a shale play that resembles the Bakken.

Jon Pepper, a Hess Corp. vice president, said his company is experimenting with Bakken technology on its holdings in China and France

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