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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1951: Striking Oil on Clarence Iverson’s Wheat Farm Near Tioga

Back in August 2008, with the North Dakota oil boom underway near the end of a summer of very high energy prices, James MacPherson of the Associated Press told the story of the birth of the oil boom in a wheat field on April 4, 1951. He wrote:

TIOGA – Retired roughneck Tude Gordon remembers getting ribbed for helping perforate North Dakota’s prairie in search of oil.

That was 57 years ago, and locals scoffed at outside oilmen poking around the countryside, said Gordon, 93, of Williston. Years of effort to find oil had found only dry holes, and North Dakotans had reason for doubt, he said.

“One man told me he’d drink every drop of oil that comes out of North Dakota,” Gordon recalled. “I told him to watch out because he might have to eat his words.”

Gordon, an Oklahoma native, said he worked on rigs in many states. He and other roughnecks from Oklahoma and Texas endured bitter winters of drilling wildcat wells in North Dakota, and even they became wary. But at one well south of Tioga, on Clarence Iverson’s hilly wheat farm, Gordon said he and others saw promise.

“I told Clarence Iverson: ‘It looks to me like you’ll be able to go to Arizona in the winter time,'” Gordon said.

On April 4, 1951, Amerada Corp.’s well struck oil on Iverson’s farm, spurring an oil frenzy that has lasted six decades throughout the Williston Basin, a 134,000 square-mile-area that includes North Dakota, South Dakota, Montana and the Canadian provinces of Saskatchewan and Manitoba. Western North Dakota accounts for more than a third of the Williston Basin acreage.

Gordon was one of about a dozen men on the well when oil was first brought to the surface, and he is now the only one living.

Sid Anderson, a former state geologist and petroleum engineer, was a college student at the University of North Dakota when oil was discovered in the state.

“It was brand new, then, and pretty exiting times,” said Anderson, of Grand Forks.

The amber-colored oil in the area was of such high quality, Anderson recalled, that “you could have run a diesel with it straight from the well.” . . .

No one was as exited about the discovery of oil in North Dakota as geologist Thomas Leach, and no one did more to coax companies to look for oil in the Williston Basin, said Clem Weber, an engineer who worked for Leach.

“He was determined and optimistic that oil would be found,” Weber said. “He was as much as a businessman as he was a geologist.”

Weber said Leach first visited the state in 1928, as a chief geologist for Transcontinental Oil Co. He was convinced oil was locked beneath North Dakota and the Williston Basin but he could not persuade the company. Leach then struck out on his own, opened an office in Bismarck and bought up thousands of acres in leases.

“This was the outcropping that he felt would be oil-productive,” Weber said.

Leach, who prodded Amerada to drill the Iverson well, was ecstatic when oil first surfaced there, said Weber, who was hired by Leach exactly one month before the discovery.

The men were in Leach’s Bismarck office when news of the Tioga strike hit.

“He was so exited, he couldn’t get up there fast enough,” Weber said.

“He was a very humble person and gentleman, and never said ‘I told you so,'” Weber said. “His work spoke for him.”

Leach became one of the largest mineral owners and oil operators in the state, and his company, North American Royalties, was the first company in North Dakota to be listed on the American Stock Exchange. . . .

Leach, an Army artillery officer in World War I and World War II, also had to put his exploration on hold but returned to North Dakota immediately after the war, Weber said.

Ed Murphy, the state geologist, said the earliest permit issued for oil exploration in North Dakota was in 1923. About two dozen permits had been issued before the Iverson strike, and at least a few dry holes were drilled within a few miles of the Iverson farm, Murphy said.

Clarence Iverson wasn’t pleased when seismologists exploded dynamite in his wheat fields looking for oil, said his son, Cliff, who was 20 when oil was found on the family farm.

“He worried a lot about his water wells,” Cliff Iverson said of his father. He only remembers his father smiling when oil surfaced.

The farm became one of the biggest tourist attractions in the Upper Midwest after oil was discovered there, Iverson said.

“They came from as far as Minnesota and all over North Dakota and Montana,” Iverson said. “People knew it was history in the making, and it changed a lot of people’s lives.”

The Clarence Iverson No. 1 produced 585,000 barrels for 28 years. Clarence Iverson died in 1986, a wealthy man “who never got used to all that money,” his son said.

Cliff Iverson still raises durum on the farm and lives in the pink home where he grew up – though he can afford not to. He said he’ll retire when his 51-year-old cab-less combine wears out.

“Guys that are used to living simply are hard to change,” Iverson said.

Today, nodding oil pumps are scattered throughout the region, and roads are heavy with oil traffic. The well site at Iverson’s farm now is marked with a monument and overgrown with durum. . . .

Gordon said he relishes knowing he worked on the well that sparked the frenzy in the Williston Basin. And for years, he couldn’t pass up the chance to rub it in with the pessimistic man who claimed he would guzzle any oil found in the state.

“I used to kid him every time I’d see him, and ask him how he’s coming drinking all that oil,” Gordon said.

There’s a small postscript to this: MacPherson, who’s still reporting on North Dakota oil and natural gas for the AP (look for some of his recent articles via Google News), recently wrote an article in which Lynn Helms, director of the North Dakota Department of Mineral Resources, said: “We are now looking at the possibility of 700,000 barrels a day and we see that coming in the next four to seven years.” Helms added: “We’re starting to see indications that we could reasonably get 11 billion barrels. I’m running out of superlatives. We’re going to have to invent some new ones.”

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