The Bakken is the Bakken is the Bakken. Right?
And there’s no difference between apples and oranges?
Like a lot of things on either side of the 49th parallel, from geology to economics the U.S. Bakken in North Dakota and Montana and the Canadian Bakken in Saskatchewan are as dissimilar as they are alike.
Gibson Scott, energy research director at ITG Investment Research, laid out some of the reasons why in late February at the Hart Energy-Canadian Society for Unconventional Resources second annual conference in Calgary in developing unconventional in Canada.
“About the only thing they have in common is that they both begin with the letter B,” he said.
Differences in geology play a key role in creating two very different resource plays, Scott said.
Overriding many of the varying characteristics he said the Canadian Bakken presents many better economics than its U.S. peer.
“In terms of economics, the Canadian Bakken truly shines,” Scott argued, estimating that the cost of completing a U.S. Bakken well has climbed to $9 million from $6 million in 2009, compared with an increase in Canada to C$2.0 million-$2.9 million from $1.6 million over the same period.
Canadian pools localizedOne of the distinguishing features is that the Canadian Bakken exists in localized pools that have risen over time and become trapped in small pockets along an incline into Canada, while the U.S. Bakken formation is deeper and more widespread.
It’s the result of millions of barrels of oil that “escaped the United States” millions of years ago and flowed into what is now Canada, Scott said.
The end result is that the Bakken is different to produce depending on where drilling is taking place in the Williston Basin, with the Bakken-rich plays of southern Saskatchewan offering shallow pockets that are comparatively easy and cheap to access.
On the flip side, the Saskatchewan pockets do not yield the same large volumes of oil as North Dakota, where Bakken crude has drastically altered the North American oil supply.
Currently, Scott estimates, the U.S. Bakken has topped 800,000 barrels of oil equivalent per day, up about eight-fold from the Canadian Bakken.
The cost of doing business in Canada is bolstered by the Saskatchewan government’s royalty rates, he said.
What the two sides of the border share is a lack of pipelines to access markets, triggering the emergence of rail, which puts pressure on producers to move quickly to collect the best price for their production, Scott said.
Alberta Energy Minister Ken Hughes told the conference the U.S. Bakken caught everyone off guard, by growing faster than had been anticipated and significantly changing the continental industry.
“Everyone knew that was possible, but not everyone predicted how quickly that would happen,” he said.