The Start of the Bakken Boom in 2005

Around the time of Hurricane Katrina and the oil shock it delivered to the U.S., especially the Southeast, exploration companies started to open up the middle of the Bakken formation in North Dakota, using horizontal drilling to get at the oil they’d known about for decades. In late October 2005, James MacPherson of the Associated Press wrote:

Oilmen have known for decades that a thin layer of dense rock nearly two miles beneath the surface in western North Dakota holds millions of barrels of oil.

Demand never had driven technology far enough to tap the “middle” Bakken Formation. Record oil prices changed that.

“We’ve known for 50 years the oil is there,” said Donald Kessel, vice president of Houston-based Murex Petroleum Corp. “Technology is catching up to the point where you can make it economical.”

By all accounts, however, the knowhow is nowhere near perfected on the middle Bakken.

“We are all like blind men feeling our way in the dark now,” said Kessel, who holds an oil engineering degree from North Dakota State University.

Kessel said his company was the first to get a producing well in the middle Bakken in North Dakota. The well was drilled last November and began producing a few months later.

The Stacey Lynne well, near Tioga, N.D., is within five miles of where oil was first found in North Dakota in 1951. The Clarence Iverson No. 1 produced 585,000 barrels for 28 years.

That well was drilled vertically. Wells aiming for the middle Bakken are drilled vertically to about 10,000 feet and then “kick out” for as many feet horizontally.

Advanced horizontal drilling techniques used successfully in the middle Bakken in Montana’s Richland County have not had much success just over the border in North Dakota.

Julie LeFever calls it “a neat geologic problem.”

LeFever, a geologist with the state Geological Survey in Grand Forks, has been studying the Bakken Formation for about 20 years. She believes the Bakken Formation in North Dakota – which arcs from Stark County in the southwestern part of the state north to Bottineau County – could hold as much as 4 million barrels of oil per square mile. The main activity so far is in Dunn, McKenzie and Williams counties.

“We know it’s just an outstanding source rock, but the real key is, How do we unlock it? ” LeFever said.

The Bakken Formation itself runs from Saskatchewan through Montana and into North Dakota, in three layers. Oil was taken from its top layer – a layer created from organic matter “long before dinosaurs” – by traditional drilling techniques over a 20-year-period in North Dakota beginning in the mid-1970s, LeFever said.

The middle 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.

In Montana, the middle Bakken is mostly a more porous and harder dolomite.

To capture oil from the middle Bakken in North Dakota, most companies “fracture stimulate” horizontal wells by forcing pressurized fluid and sand to break pores in the rock and prop them open to recover oil.

The problem is that when the middle Bakken is fractured, rock above the well also breaks, dumping pockets of water into the oil, said Lynn Helms, state Oil and Gas Division director. The more abrasive rock in the middle Bakken also is harder on drilling equipment, Kessel said.

Helms said about 20 operators have leased about 250,000 acres of land in the Bakken Formation in North Dakota over the past 18 months. About 20 wells targeting the middle Bakken have been drilled, and some are getting as much water as oil, he said.

At least six companies are working to solve the problem. One is Dallas-based Headington Oil Co., which has two wells near Belfield, N.D.

“We’re still working on it, as all companies are,” said Bill Walker, a Denver-based geologist with Headington. “Everybody is struggling right now on how to develop those oil wells in North Dakota.”

Headington has made some headway in middle Bakken technology, but Walker said the company is keeping it secret – for now. “It’s fairly early in the play to be sharing information,” he said.

Walker said it costs about $4.5 million to drill a well tapping the middle Bakken, about $1 million more than in Montana.

Richland County, Mont. has been producing oil from the middle Bakken since 2001, and production has doubled every year since, Helms said.

“It took about two years to figure it out in Montana,” Helms said. “It’s only been a year’s worth of trying in North Dakota. They will figure this thing out.”

Helms said about 3,300 oil wells now operate in North Dakota, but only 20 are targeting the middle Bakken.

North Dakota wells produced a daily average of 99,896 barrels of oil in August, the highest level since 1998, Helms said. He said increased activity in the middle Bakken could easily push the daily average to 150,000 barrels a day, a record set in the early 1980s. . . .

“The high oil prices is what’s keeping oil companies here while they get through the learning curve,” Helms said.

“The (middle Bakken) is really small at this point, really only a speck of a speck,” he said. “But it has potential to be a big deal, a very big deal.”

Earlier, in February 2005, the Bismarck Tribune reported on the resurgence of the region’s oil economy:

Oil prices are high, old wells are being put back into production — or re-entered with new technology — and new wells are being drilled in the region.

Mineral acres in McKenzie County are fetching the highest-known prices ever paid in North Dakota’s oil history. . . . The middle Bakken play from Belfield to the state line at Sidney, Mont., is poised for a wave of drilling that could bump the state’s daily production over 100,000 barrels.

These are exciting times, but hopefully not, in the immortal words of Yogi Berra, “deja vu all over again.”

Townspeople and ranchers haven’t forgotten.

Gene Veeder heads up economic development for McKenzie County. When he went back home 12 years ago, “Everything was empty and we’ve spent 10 years trying to fill it up.” . . .

Lynn Helms, director of the State Oil and Gas Division, predicts that between 200 and 400 new and re-entry wells will be drilled annually over the next several years. The prediction hinges on continued high oil prices and whether producers figure out how to successfully pierce the oil -rich middle Bakken with horizontal drills.

In Belfield, oil service business owner Rob Heim said business has never been better. He said what’s ahead and what’s already happening in the oil field has created a buzz everyone can hear.

“This is going to sustain this area for a long time,” Heim said.

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