Industry representatives polled more than a year ago by Petroleum News accurately predicted that the federal government would end up at least doubling the amount of crude oil that could be technically recovered from the U.S. portion of the Bakken petroleum system.
That’s largely because the 2008 study conducted by the U.S. Geological Survey did not include crude oil estimates for the Three Forks formation, which many believe to be as prolific as the Bakken formation. And that’s how it shakes out in the long-awaited, updated USGS study released April 30 by the U.S. Department of the Interior.
USGS now believes the entire Bakken petroleum system, including the Three Forks, holds a mean 7.38 billion barrels of undiscovered, technically recoverable oil, compared to a mean 3.65 billion barrels estimated in the 2008 study. Estimates range from a low of 4.42 billion barrels to a high of 11.43 billion barrels.
Of the 7.38 billion barrel mean, 3.73 billion barrels is attached to the Three Forks, meaning the 3.65 billion barrels attributed to the Bakken in the 2008 study remains unchanged in the revised study five years later. The USGS is now saying the Bakken and Three Forks formations hold roughly the same amount of technically recoverable oil.
USGS also calculated that the Bakken petroleum system contains nearly three times more recoverable gas than originally thought — a mean of 6.7 trillion cubic feet of natural gas and 530 million barrels of gas liquids. Gas estimates range from 3.43-11.25 trillion cubic feet and 230-to 950 million barrels of gas liquids, with the increases due primarily to the inclusion of the Three Forks formation.
Three Forks is expansive
Three Forks is a thicker and more extensive horizon than the Bakken, extending further east across North Dakota, further west into Montana and as far south as South Dakota. However, only about 5 percent of the formation is said to have been tested, compared with 14-33 percent in some of the better-known parts of the Bakken.
The Interior Department noted that since its 2008 assessment, more than 4,000 wells have been drilled in the Williston Basin, providing updated subsurface geologic data that helped in updating the study.
“Previously, very little data existed on the Three Forks formation and it was generally thought to be unproductive,” the agency said in a press release. “However, new drilling resulted in a new understanding of the reservoir and its resource potential.”
PNB polls industry
Industry representatives interviewed by Petroleum News in early April 2012 at the Bakken Investors Conference in Minot, N.D., agreed the USGS would have to at the minimum double its estimated oil recovery to around 8 billion barrels.
“That’s what I’m hearing based on new data that’s come in on the wells that have been drilled,” Laura Erickson, an industry consultant and head of Williston, N.D.-based Plains Energy Technical Resources LLC, said on the conference sidelines.
“I think there are a lot of people who think that is reasonable,” said Terry D. Hildestad, former president and chief executive officer of MDU Resources.
“I’ve seen people coming up with even larger numbers,” added Kathleen Neset, president of Neset Consulting and widely known as the “Godfather of the Bakken.”
Closer to 11 billion barrels
On learning of USGS’ latest oil recovery estimates, Ron Ness, president of the North Dakota Petroleum Council Petroleum Council, told attendees at the 21st Williston Basin Petroleum Conference in Regina, Sask., on May 1 that he believes the actual number is closer to the USGS’ high estimate of 11 billion barrels.
“That’s a big number. It’s double what it was before,” he said of USGS mean assessment. “But I think as an industry, and most of the North Dakota prognosticators that you see, think it’s probably on the low side. …”
In fact, Bakken resource estimates have varied widely dating back to the 1950s. And USGS latest estimates would be considered ultra-conservative compared to some industry projections, most notably those compiled by E&P independent Continental Resources, a major producer and largest leaseholder in the Williston Basin.
Continental’s robust estimate
Since 2010, Continental has believed at least 24 billion barrels of oil equivalent could be recovered from the Bakken system, based on a 3.5-4 percent recovery rate from an estimated 577 billion barrels of in-place resource. (See articles on pages 21 and 56 with updated estimates from Continental.)
But that 24 billion boe recovery projection is likely to be increased dramatically in the near future. Last summer the company increased its in-place resource estimate from 577-to 903 barrels, a whopping 56 percent increase. The 326 billion barrel in-place increase was based primarily on numerous oil-saturated core samples taken at various locations, deep within the Three Forks formation.
Continental has yet to officially increase its recovery estimates. However, a 3.5 percent recovery rate on 903 billion boe would boost the company’s official 24 billion boe yield to 32 billion, while 4 percent would yield 36 billion boe and 5 percent, 45 billion boe.
Continental is so sure of its expectations for the Williston Basin that last October it announced a highly ambitious goal of tripling production and reserves by year-end 2017, with the Bakken taking the lead role in the effort.
The “geological foundation” that “underpins” the USGS’ updated assessment was specifically provided by the North Dakota Geological Survey, North Dakota Industrial Commission, Montana Board of Oil and Gas, and multiple industry groups working in the region, according to the Interior Department.
“This new information and data allowed USGS to develop a more robust geologic model and understanding of the petroleum system of the Bakken and Three Forks formations,” the agency said.
Estimates are conservative
Meanwhile, Lynn Helms, director of the North Dakota Department of Minerals Resources, DMR, welcomed the USGS update though conceded the numbers were probably conservative.
“Assessments like these are typically more conservative because technology changes so rapidly,” he said. “We agree with the range of numbers and think the high estimate of 11 billion barrels is a reasonable target as technology and exploration of the Three Forks continues.”
Helms said the USGS assessment gives state and counties, as well as operators, a better idea of what to expect from development.
“This will assist in further planning of all the necessary components of oil and gas development, from regulation to roads and housing,” he added.
Study is significant
North Dakota state geologist Ed Murphy acknowledged the significance of including the Three Forks in the study.
“This assessment shows the importance of the Three Forks development, something that companies are just beginning to explore,” he said. “This is an evolving oil play, and we will continue to evaluate the results as more wells are drilled into the deeper Three Forks benches.”
In 2008, DMR released its own assessment of the Bakken system at 2.1 billion barrels, followed by a 2010 assessment of the top 50 feet of the Three Forks at 1.87 billion barrels, for a total of technically recoverable oil just shy of 4 billion barrels.
However, the department said it has no plans to update its 2010 assessment, but has been collecting “pertinent data” should state policy makers feel an update is needed.
