Is the Bakken just an urban legend?
A shout-out to my artist, Laura, for bringing this to my attention: Snopes.com, a well-known urban legend “buster” site, has recently taken on none other than the Bakken Shale play in the northwest US as its target. I’m sure this will come as quite a surprise to the legions of companies who are staking claims in the area.
Snopes got curious about a post it came across that virtually screams the praises of this giant field. “The Bakken is the largest domestic oil discovery since Alaska’s Prudhoe Bay and has the potential to eliminate all American independence on foreign oil,” the post related. “The Energy Information Agency (EIA) estimates it at 503 billion barrels. Even if just 10% of the oil is recoverable … at $107 a barrel, we’re looking at a resource base worth more than $5.3 trillion.”
Well, obviously oil is no longer selling at $107 per barrel. That’s strike one.
Next, the post mentions “a recent technological breakthrough” that has “opened up the Bakken’s massive reserves” without mentioning, specifically, what that technological breakthrough might be. Ever inquisitive, but lazy as hell, I decided to look no farther than my own backyard, swiping a copy of Hart’s recent Bakken Shale Play Book from our library. In the technology section, more than one “breakthrough” is mentioned: cableless seismic, horizontal drilling, staged fractures as well as penetrating natural fractures, fracture monitoring, multilateral wells, advanced measurement-while-drilling techniques, predictive geosteering, completion design, and artificial lift techniques, to name a few. So now, with this “new technology,” the industry has opened up access to more than 500 Bbbl. Of light, sweet oil. Costing Americans just $16 per barrel. Enough energy to fuel the American economy for 41 years.
Recent USGS estimates put the amount of recoverable reserves closer to 3.65 Bbbl. Strike two, perhaps.
However, I have to take umbrage at the Snopes.com rebuttal as well. Saying that the post was “intended to sell subscriptions to an investment newsletter,” it allows as how geologists have agreed with most of these assessments, yet it poo-poohs the idea that the Bakken is a big play.
“Ceratainly, 3.65 BBbl of recoverable oil is nothing to sneeze at, but a little perspective is in order,” Snopes.com notes. “The US currently imports an average of about 10 MMbo/d … so even if all the estimated undiscovered oil in the Bakken formation were extracted today, it would only be enough to wean the US off of crude oil imports for one year. That’s still a good thing, but it’s not nearly ‘enough crude to fully fuel the American economy for 41 years straight’ as claimed above.”
OK, OK. I get it. We have, on one side, “The Post,” which is breathless in its enthusiasm. We have, on the other side, “Snopes.com,” which prides itself on popping balloons full of nonsense. Did either side think to call the United States Geological Society, which provided the latest reserve estimates for the Bakken, or indeed any of the operators active in the play? I think, if they had (and of course I didn’t, only having come across this gem today), they might have discovered that there is more than a kernel of truth to the post, and more than a kernel of truth to the rebuttal. The fact is that the Bakken, like every other shale play in the US, is fraught with hazards, and at some commodity price level, the economics no longer make sense. But it is a truly monstrous play, and companies that do well in the Bakken are the companies that know how to apply the best technology in the most cost-effective way. Odds are good that the Bakken is not going to wean American from foreign oil. But it and its shale play counterparts are doing a good job of putting this country back on the map as a formidable producer of hydrocarbons.
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April 2nd, 2009 at 9:41 am
Part of the problem is always the hype that seems to be required to get any headlines. Horizontal drilling has been around and in use for at least 20 years..so is this a new technology. And how do you get the oil out of the shale…it can be costly and what is the life of any one well? I was told by Texas geologists in the O and G business that many wells in similar shales last about 3 years…at most…many less than 18 months and then a new well must be drilled and fraced. So it is expensive but it can be done. As Friedman has suggested…set the base price of gasoline at $4.00/gallon and then a whole lot of risk takers and new technologies and energy sources will be forthcoming.
April 2nd, 2009 at 11:11 am
Snopes.com’s rebuttal is to be expected in today’s politically correct environment where anything positive concerning the continued supply and use of oil and natural gas as an energy source is viewed as naive and uninformed.
In reality, it is they who are naive and uninformed when they show their lack of understanding about what proven reserves actually means and how the USGS ranks a resource in terms of size.
The proven reserves are rooted on the existing technology and commodity price at the time of the estimate. One has only to look back a decade to see how advances in technology and price changes have dramatically increased the proven reserves by several orders of magnitude for the Bakken alone. There is little reason to believe that trend will not continue into the future and that we will see the proven reserve value continue to increase.
Current recovery factors for Bakken horizontal wells are estimated in the +/-2% range. Compare this with conventional reserviors where 10% - 30% recovery factors are considered reasonable and it is easy to see how a small improvement in the technology could significantly increase the proven reserves. A mere 2% increase would double the proven reserves of the Bakken.
It is common for those outside the industry to reduce new reserve values down to days of US consumption, often in an effort to off-handedly dismiss the significance of the discovery.
This was done with the ANWR reserve estimates produced by the USGS. When they evaluated the potential, the USGS provided the normal 10, 50, and 90 percentile rankings in terms of size. Without hesitation, those opposed to opening ANWR grabbed the 90 percentile values, those with the smallest reserve value, rather than the 50 percentile, the most likely value, and again reduced them to years of US consumption in a effort to dismiss the potential of the area.
This Snopes.com rebuttal is just more of the same.
Unfortunately or perhaps fortunately for those reading this, I have no more time to vent, as I have plenty of work to do perpetuating this urban legend out here in the plains of North Datkota.
April 2nd, 2009 at 2:04 pm
The Snopes figures come from somethiing I first remember hearing being thrown around the radio airwaves about a year ago. But,the source is verifiable: An article from the EIA, “Technology-Based Oil and Natural Gas Plays: Shale Shock! Could there be Billions in the Bakken?” link:
http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature_articles/2006/ngshock/ngshock.pdf
Without going into a long explanation the article does make qualifying statements for the values it states, but somehow that didn’t get communicated as time passed. The article was published in November, 2006, about about a year and a half before the actual USGS reserves assessment.
April 2nd, 2009 at 2:42 pm
These are my replys to my Uncle Skip a very intelligent EE after he sent me the article about the Bakken.
SECOND EMAIL RESPONSE
Skip – had a brain storm while working out this AM. The Bakken shale is sitting under federal land so why not quit leasing to the oil companies and the government can run (that’s an oxymoron by the way) its own oil company and own all the oil. Then it can build its own refineries and infrastructure and take away that egregious federal tax on gasoline. It would fit well into the governments bail out of the Bank of America ($60 Billion loss – largest in history), Citigroup, GM, Ford, etc. We all are going to own stock in these companies why not start our own oil company and own stock in it and let the Government run it. You think the gasoline lines were long in the 70’S!
Anyway if you have question you can call me for a more in depth conversation on the oil business and what it means to this country.
Butch
FIRST EMAIL RESPONSE
Uncle Skip, If this information were true why are we importing and not producing our own oil to alleviate our dependence on foreign oil? Damn, we are fighting a war in Iraqi because of oil. Don’t know where this emanated from but its bunk just pure bunk. Tell your friends to quit reading the newspaper and think for themselves. Below is an excerpt from the EIA – check it out for yourself and pass it on.
Butch
ENERGY OUTLOOK EIA
Overview. The worsening global economy and a weak oil consumption outlook are keeping the world oil market well supplied, despite two downward revisions in production targets by the Organization of the Petroleum Exporting Countries (OPEC) within the past few months. Lower global oil demand and rising surplus production capacity through at least mid-year 2009 reduce the possibility for a strong and sustained rebound in oil prices over that period. OPEC is scheduled to meet in Vienna on March 15, which could lead to another production cut to mitigate some of the slack in the world oil market. However, near-month oil prices will likely be driven primarily by the global economy. Global real gross domestic product (GDP, weighted according to shares of world oil consumption) is assumed to decline by 0.1 percent in 2009 and rise by 3.0 percent in 2010, versus last month’s assessment of 0.6-percent growth in real GDP in 2009 and 3.0-percent growth in 2010.
Consumption. World oil consumption is projected to fall by 1.2 million barrels per day (bbl/d) in 2009, representing an additional decline of 400,000 bbl/d from last month’s Outlook. World oil consumption is expected to rebound in 2010, growing by more than 1.2 million bbl/d, due to an expected recovery in the global economy. Oil consumption growth over the next 2 years is concentrated in countries outside of the Organization for Economic Cooperation and Development (OECD), particularly China, the Middle East, and Latin America, offsetting projected declines in OECD oil consumption (World Oil Consumption). If the world economy recovers sooner than EIA now anticipates, oil consumption could be higher than expected, putting upward pressure on oil prices.
April 2nd, 2009 at 8:01 pm
Beware. Now urban rumors spread via email are often headlined with, “this has been verified by Snopes.”
April 13th, 2009 at 12:27 pm
NESEP program 65/6/7/8 Oklahoma U. Field of study Geomorphology (geology,geography,meteorology.demography.) intended to be used in intell work. USMC SPEC RAD OPR in far east. Here at home and 40 plus years later, it is interesting to see how MUCH the Feds lie to our nation. We do not need arab ‘anything’ if we drill the Bakken, ANWR, and the Marcellus shale. My grand kids will be fine until we get our next 30 or 40 Nuke generating plants fired up!!!
As far as Global warming/?? Remember Krakatoa?? REDOUBT/new island being born in pacific/volcanic explosion in central America all within a few weeks equals a winter next June and JUlY. Hoo Yah and Semper Fi PS, after days of reviewing this stuff on USGS sites and others, I really appreciated yours. Snopes, bye the bye may well turn out to be a ‘mom and pop’ org, or so it is r u m o r e d. LOL
July 25th, 2009 at 4:26 pm
So why are we running a pipeline from Canada to ship sand with oil in it to Connoco/Phillips in Wood River< Illinois.
It seem as though oil shale would not be that much more to extract crude from.
December 1st, 2009 at 3:52 pm
Hey Monte you say
Without hesitation, those opposed to opening ANWR grabbed the 90 percentile values, those with the smallest reserve value, rather than the 50 percentile, the most likely value, and again reduced them to years of US consumption in a effort to dismiss the potential of the area.
DO YOU REALLY THINK THAT THE 50 percentile event is more likely than the 95 percentile event? THINK AGAIN.
Also you talk about “proven reserves’ USGS DID NOT mention proven reserves. Their estimates are “undiscovered, technically recoverable oil in the Bakken Formation” I emphasize undiscovered NOT proven!
And of course then the Earth is only 6000 years old - right Monte?
February 28th, 2010 at 1:14 pm
People,
I’m sorry to say that the hole Bakken play is an urban legend is a bunch of bull. We are working in the Bakken play and also starting in the 3 folks play. We are watch these via scada systems on the rod pumps. To let you all know that we are seeing 6 mouths to 3 years for the wells to “pump off” for the first time. Pump off mean to pump a well down to the point were the barrel of the pump is empty. This is not a bad thing, this is normal. The flood from the perfs will full the well again. On the 3 folks formation they are seeing in 24 hour test of test wells a flow rate of 2400 to 3200 bpd (barrels per day) of 70% cut of oil and 1.5 to 4 MCF of gas.