Despite production growth in the Bakken formation around 1990, at that time North Dakota’s oil industry was in the midst of a 11-year decline, from 1984 through 1994. In March of ’94, the Associated Press reported:
Despite lagging production, North Dakota’s oil patch is far from dry, says a new report that concludes the state has realized less than half of its oil potential.
The study, which its two geologist authors hope to finish this summer, estimates at least 1.3 billion barrels of oil remain to be pumped from known producing areas.
It is the first detailed look at North Dakota’s possible oil reserves, said Tom Heck, a state Geological Survey geologist who undertook the effort along with Richard LeFever, a geology professor at the University of North Dakota.
Since 1951, North Dakota oil producers have extracted about 1.2 billion barrels of oil, according to statistics from the state Geological Survey and the North Dakota Petroleum Council.
“One of the perceptions among some oil companies might be there isn’t a lot of oil left to be found,” Heck said. “This was done in part to try and counter some of that perception… There is a lot of potential left up here.”
The paper estimates that 600 million barrels of oil are left to be pumped from current wells, using existing production methods. It says about 700 billion barrels remain to be found within the state’s known producing area, which is mostly in western North Dakota….
North Dakota’s oil production last year totaled 31.1 million barrels, a 5.4 percent decrease from 1992 and the lowest annual production since 1979, when western North Dakota was on the brink of an oil boom.
But a few years later, in March of 1997, Matt Cory of the Grand Forks Herald reported on the “Upswing in the Oil Patch” that had begun in 1995:
For the second straight year, the oil industry in North Dakota has seen an increase in oil production and revenue after a decade of decline.
Last year, 32.3 million barrels of oil were produced in North Dakota, up 9.3 percent from 1995’s total of 29.3 million barrels. That total ranked North Dakota as the ninth-largest oil -producing state.
“It has a huge impact on the state,” said Lowell Ridgeway, executive director of the North Dakota Petroleum Council in Bismarck. “For a number of years, we have picked up several hundred jobs. It’s a big boom to the local economies.”
Crude oil produced from 4,087 wells in North Dakota last year was valued at $624 million. And revenue from taxes totaled $52.6 million, up $9.4 million from 1995. The average production rate was 88,622 barrels a day in 1996, up 8,258 from 1995.
The rise in production can be attributed to general economic conditions and improved technology, said Ridgeway, who has been with the council since 1978.
Ridgeway cited the rise in oil prices as spurring exploration in the state. In 1994, the price of a barrel of crude oil was $14.50. The average for 1996 was $19.30 per barrel.
“That, coupled with improved drilling technology, seismic technology and horizontal drilling is the reason for the resurgence,” he said.
In addition, during the 1995 Legislature, taxes were lowered to stimulate more oil and gas exploration, he said.
While production is on the upswing, North Dakota is far from the oil boom of the mid-’80s. The all-time record for oil production in the state was 1984, when 52.6 million barrels were extracted at a rate of 144,000 barrels a day.
That year also was the peak for the industry, as production and revenue declined steadily until 1995.
“It (the decline) was due to the oil price crash of the late `80s,” Ridgeway said. “When the industry slowed down, states like North Dakota suffered.”
During the late `80s, demand increased, and it became cheaper to import oil from outside sources, specifically Middle Eastern countries.
In the next February, Kevin Bonham of the Grand Forks Herald updated the story to reflect further growth in 1997:
Crude oil production in North Dakota rose by a dramatic 9.8 percent in 1997, marking the third straight annual increase.
Production increased by 3.5 million barrels, for an annual total of 35.8 million barrels, the largest amount of crude oil produced in the state since 1991, when production totaled 35.9 million barrels, according to a new report from the North Dakota Petroleum Council….
Here are some of the particulars:
The daily average production in 1997 was 98,200 barrels, an increase of 9,578 barrels over 1996. Production in 1996 was 9.3 percent higher than in 1996. The record daily average production in North Dakota is more than 144,000 barrels, set in 1984.
The value of North Dakota crude oil produced in 1997 exceeded $623 million.
Average daily production of oil wells was 29 barrels in 1997, continuing the state’s rank as the nation’s ninth largest crude oil producing state.
Revenue from oil extraction and production taxes amounted to $53.5 million in 1997, an increase of $900,000 over 1996.
Ridgeway said it is unlikely that the state will be able to continue to increase its oil production, even if oil prices level off, because drilling costs are higher in North Dakota than in other states.
The average oil well in North Dakota is about 8,000 feet deep. In Kansas, it is about 4,000 feet.
The cause of this growth, not surprisingly, was horizontal drilling techniques. In May 1998, Joe Gardyasz of the Bismarck Tribune reported on the technology:
Horizontal drilling enables producers to revitalize areas that were thought to be depleted. The technology has turned around an industry that would otherwise be declining in North Dakota, says State Geologist John Bluemle.
Following 11 straight years of decreasing prduction, 1997 marked the third consecutive year of production increases in the state. A total of 35.8 million barrels were produced last year, up 3.5 million barrels from 1996.
Bowman County has become the state’s top producing county, strictly because of horizontal drilling, Blueml said.
“If it weren’t for horizontal wells, production in North Dakota and Saskatchewan would be declining,” he said. “Saskatchewan in particular is booming because of horizontal drilling.”
By the end of 1997, approximately 25 percent of the state’s total oil production came from horizontal wells, and the percentage is increasing. That’s impressive, he said, considering that only about 12 percent of the state’s wells are horizontal wells.
In 1997 106 horizontal wells had either been completed or were drilled; of those 103 were producers and only three were dry holes.
Between half and three-quarters of the rigs operating for the past several years in the state have been on horizontal wells, said Bruce Hicks, manager of horizontal drilling for the Oil and Gas Division.
“So it looks like it’s going to be the trend of the future for more of these wells to be drilled,” he said. “The horizontal drilling technology is being used more and more in field operations, and we do expect it to continue down the road.”
In southeastern Saskatchewan, more than 50 percent of the oil produced in that region now comes from horizontal wells.
“It’s really taken off,” said Malcolm Wilson, director of Saskatchewan Energy and Mines’ Energy Development Branch. “Horizontal wells have really done a great job of breathing new life into southeastern Saskatchewan, our portion of the Williston Basin.”
In the early ’90s the Canadians’ success drew the attention of North Dakota producers, said Paul Diehl, a petroleum geologist with the North Dakota Geological Survey.
By 1991 horizontal production began in the state, but only in a type of shale known as Bakken formations. But within two years, production from these wells in North Dakota was already declining.
“But we noticed in Sasketchewan they were still drilling a lot of horizontal wells and surpassing annual production levels each year,” Diehl said. The formations in southeastern Saskatchewan were essentially the same as those where horizontal drilling hadn’t been tried in North Dakota.
That same year, the International Williston Basin Horizontal Well Workshop was initiated with a meeting in Minot.
“The idea was to get together and determine why they were successful in Saskatchewan and not here,” Diehl said, “and to educate the Canadians that the productive zones are similar here.”
Without the workshops, development of horizontal drilling would still have happened, but at a much slower pace, Diehl said….
The typical horizontal well may go down 8,000 feet before turning to penetrate a ribbon of rock formation that averages just 10 feet in thickness. It then proceeds an average of another mile horizontally.
Horizontal wells expose more of the compartments that contain oil to the drill bit, making it more likely the well will be able to drain them.
“With vertical drilling it’s a dice game,” Diehl said. “With a horizontal well, now you don’t have to be in an 8-inch hole that has good exposure to these compartments. The odds are much more in your favor that you’re going to penetrate a better reservoir.”
The technology has given companies the ability to return to fields that haven’t been productive for years, and in some cases actually gain more production from them than when they were originally discovered.
For instance, in 1994 the Wayne Field in Bottineau County had 33 wells averaging just nine barrels of oil a day.
When horizontal wells were drilled, they came on at between 200 to 400 barrels a day, said Diehl. “So we found we didn’t know as much about the permeability of those rocks as we thought.”