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February 17, 2011

North Dakota oil might head to over one million barrels per day and supply 100,000 jobs in North Dakota

(Harold Hamm/Continental Resources, CEO) "In total development in the Bakken we see about 48000 wells, of which 90-percent are yet to be drilled." Oil tycoon Harold Hamm says the formations in North Dakota and Montana hold about 20 billion barrels of recoverable crude. There are about 170 rigs drilling in North Dakota and oil tycoon Harold Hamm says that number is expected to rise. Hamm estimates those 48000 wells will produce as much as 1,000,000 barrels a day and it may be just a tad more than that.



In 2009, there were 18,000 North Dakota oil jobs and now there are 30,000. If it goes to a million barrels a day that number will get to be about 100,000 jobs.

Hamm called the state’s oil reserves a high-cost, unconventional oil play requiring horizontal drilling and hydraulic fracturing, using a pressurized mix of water and chemicals to break apart layers of rock to release oil. Because of that, drilling and production require a price of around $60 per barrel to make the activity profitable.

Other factors make the Bakken oil less profitable, he said, such as transportation and oil field services. He also said that government energy and environmental policy could affect drilling.

“What’s worrying everybody at this point ... is there are a lot of people who don’t think we should be using fossil fuels,” he said. “We see the (Environmental Protection Agency) going forward by leaps and bounds.”

Enbridge Energy Partners (EEP) said that it has added 145,000 barrels of capacity to its networks through an expansion to its Bakken pipelines. The company said that out of 145,000bpd, 25,000bpd will be available by early 2011 following the completion of the Portal Reversal Expansion project, and the remaining 120,000bpd by late 2012.

Gail Tverberg (Oildrum.com editor and peak oil writer) takes the negative view of the boom in shale oil.

The positive US oil scenario - By 2015, Bakken like oil fields in North Dakota, Colorado, Texas and California could yield as much as 2 million barrels of oil a day — more than the entire Gulf of Mexico produces now. This drilling is expected to raise U.S. production by at least 20 percent over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers.

Gail cites problems:

* Inadequate infrastructure and inadequate price.

As of February 8, the spot price for Brent was $99.25; the spot price for West Texas Intermediate (WTI) was $85.85, and the spot price for North Dakota Sweet was $65.61. The North Dakota price is less because what tends to happen when there isn’t adequate transportation for the oil is the selling price of the oil tends to be depressed, relative to other types. This is why the Enbridge and other pipeline expansions are important.

* Overcome decline in other oil fields

* If a lot of the increase is natural gas liquids it is not as useful

To me [Gail Tverberg], the big question is whether Bakken oil shale, other oil shales, and all of the additional NGLs can really be made economic. If they can, and the amount of oil extracted raised to the hoped-for 2+ million barrels a day by 2015 and 4.7+ million barrels a day by 2020, the new oil sources may help to keep recession away for a while longer. But if not, we are likely nearing the point where limited oil supply will push us more and more into recession. I am doubtful that the new oil shale sources can ramp up as quickly as hoped, but there is at least some glimmer of hope that these fuels will help keep the day of reckoning away a bit longer.

Gail does not address that there are potentially huge shale gas discoveries in Argentina, Quebec, Poland, India, the UK, off the coast of Israel, in China, British Columbia. There are potentially huge oil shale in Australia, China and France. There has not been any mention yet but I suspect large oil shale will be found in Russia as well.

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