Some Good News For A Change

APNewsBreak: ND oil patch may double production
JAMES MacPHERSON Associated Press
Jan. 2, 2011, 3:33PM
Share Del.icio.usDiggTwitterYahoo! BuzzFacebookStumbleUponEmail Close [X]BISMARCK, N.D. — Government and industry officials believe North Dakota's oil patch contains more than twice the amount of oil previously estimated and that the state's already record crude production will double within the decade.

If the forecast is correct, North Dakota could leapfrog in a few years from the fourth-biggest oil producing state to No. 2, trailing only Texas.

"It's a pretty rosy picture," said Lynn Helms, director of the North Dakota Department of Mineral Resources. "We have a huge amount of drilling still in front of us."

Helms said the state currently is pumping about 350,000 barrels of crude per day and was on pace to produce about 110 million barrels in 2010, up from 79.7 million last year and more than double the amount produced less than three years ago.

Record rig activity pushed by strong crude prices and refinements in drilling technology could result in North Dakota seeing a twofold increase in production. The drilling technology alone has cut the amount of time needed to complete a well from 65 days in 2008 to about 25 days.

"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 said.

At that rate, North Dakota would surpass California and Alaska based on those states' current production, said Steven Grape, the domestic reserves project manager for the U.S. Department of Energy's information administration.

"That would be pretty amazing in my book," Grape said.

North Dakota's oil patch now accounts for about 6 percent of total U.S. crude oil production. That's up from 1 percent less than three years ago.

Federal and state estimates had pegged North Dakota's portion of the Bakken shale and underlying Three Forks-Sanish oil formations in western North Dakota at about 5 billion barrels of oil, using current horizontal drilling technology.

Helms said that estimate has more than doubled based on drilling success and current production rates.

"We're starting to see indications that we could reasonably get 11 billion barrels," Helms said.

North Dakota has about 5,300 producing oil wells. About 2,000 of those have spudded in just more than three years, aimed at the Bakken and Three Forks.

About 95 percent of rigs drilling in North Dakota are aimed at those formations, and 99 percent of them hit oil, while nine of 10 are profitable, Helms said.

Ron Ness, president of the North Dakota Petroleum Council, said about 650 new wells were drilled in 2010. He and Helms expect up to 2,000 new wells in 2011, which would double the number of Bakken and Three Forks wells to date.

A record 168 wells were drilling in the state's oil patch last month but dipped to 156 last week, hampered by winter weather. Ness and Helms expect about 200 rigs to be drilling in 2011.

"We are going to be drilling a lot of wells in the next year and production is going to go up, barring any unforeseen problems," Ness said. "We're all pretty bullish on 2011."

North Dakota has risen from being the ninth-largest oil-producing state in 2006 because of the Bakken and the Three Forks beneath it. Helms said nothing surprises him anymore about the state's prolific oil patch.

"I'm running out of superlatives," Helms said. "We're going to have to invent some new ones."