North Dakota Oil: General

#4 in the nation in oil production!
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How much oil is there in North Dakota? Lots. Some think there may be more recoverable oil in North Dakota than in Prudhoe Bay, North Slope, Alaska. ND set record in 2009, beating the 2008 record.

Three-legged stools.

Energy production in North Dakota can be thought of as a series of three-legged stools:

Energy: oil, natural gas, and coal.
Technology: hz drilling, multi-stage fracking, re-frac.
Formations: Bakken, Three Forks Sanish, Lodgepole.

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General Information

1. The North Dakota Industrial Commission.

The commission has an outstanding website. One can subscribe, for a nominal fee, to premium services, but much information is free. I now subscribe to "Basic Services," which provides absolutely all the information that you would need (unless you are a consulting geologist). It costs $50/year. The 

The commission issues a daily activity report (DAR) at the close of business every business day. It appears their goal is to post it at 4:30 local time (Central Standard / Daylight) but lately it gets posted as late as 6:00 CST/CDT.

Just a glance at the report will give one an idea how busy the North Dakota oil industry is. Before the current boom, the reports were often entirely blank. At the height of the beginning of the boom, two years ago, there were some reports that were several pages long.

The two most important parts of the DAR: a) the new permits granted for oil and gas wells; and b) the initial production numbers of wells when they are released by the company and/or come off the confidential list (the vast majority fall into this category).

2. The counties.

The counties with the greatest oil activity in North Dakota are in the west and include Williams, Mountrail, McKenzie, and Dunn. When I first wrote this note,I wrote: "Oil companies are having significant success in Mountrail County. When I see a permit granted for a well in Mountrail County, I assume a) it will be successful; and b) the oil company will  use this additional cash flow to manage their drilling program." This now applies to all four counties noted.

Every three months, the state of North Dakota auctions leases for state-owned land. In November, 2009, the average lease for North Dakota acreage was $1,167/acre; acreage in Mountrail went for $3,000/acre; some for $8,000/acre. In February, 2010, the average price paid was $1,241/acre, with a range of $600/acre to $7,300/acre. In late 2010 and early 2011, there were bonuses of $8,800/acre paid in the "best" Bakken.

3. The oil fields.

Historically oil companies have attached names to "pools" of recoverable oil. It is no different in North Dakota. There are literally hundreds of oil fields in North Dakota. Some of them are as small as one section (one square mile); others are as large as four townships (four townships x 36 sections = 144 sections), or larger. There are many, many reasons for an area to be defined as a field. I might get into that later. But for now, the best use for the casual follower of the oil industry is this: it makes it easier to talk about whether a new well in a certain field is likely to be a good well or not. For example, it turns out that the Parshall oil field (162 sections) has become one of the most, if not the most, successful oil fields in the Williston Basin. Because of the way mineral rights are sold and held, it is not uncommon for one or two oil companies to "own" an entire field. For example, EOG is the predominant player in the Parshall; Whiting is the predominant player in the Sanish oil field, just west of the Parshall.

4. Spacing.

During the first few years of the current boom, most oil wells in North Dakota were spaced at either 640 acres or 1,280 acres. In 2010, the North Dakota Industrial Commission ruled that companies did not have to request permission to go to 1280-acre spacing, and that appears to be the new "norm." However, more and more requests are being made for 2560-acre spacing for multi-well pads (4 - 6 wells on one pad). A section has 640 acres; two sections, obviously have 1,280 acres. Whiting seems to have pioneered 1280-acre spacing in the Bakken. There is an ongoing discussion of the benefits or non-benefits of 1280-acre spacing. See also my discussion on "spacing" on my FAQs page.

A horizontal lateral that is the length of one section (generally diagonally) is referred to as a "short lateral." A lateral that is the length of two sections is referred to as a "long lateral." When one looks at a map of the wells in North Dakota, a "long lateral" that goes east-west is referred to as "lying-down," whereas a "long lateral" that goes north-south is referred to as "standing up."

5. Conventional wells.

Conventional wells are simply vertical wells, "straws pushed into the ground," as the roughnecks might say. Some say that "we" have seen the last of vertical / conventional wells in North Dakota. Others disagree: vertical wells might still work in the Lodgepole.

6. Unconventional wells.

Due to the geology and structure of the shale-like formations in the Bakken and related formations (e.g., the Three Forks Sanish, and perhaps the Lodgepole), conventional drilling seldom produces economical wells (the Lodgepole may be an exception). An unconventional well is short-hand speak for a) horizontal drilling, and b) stimulation by fracturing. The technology is discussed in depth elsewhere.

7. Horizontal drilling (hz drilling).

Drillers generally reach the Bakken formation at about 9,000 feet. At that point, the drill bit goes horizontal. If the lateral goes one mile, the total depth (TD) of the well is about 14,000 feet. If the horizontal leg goes two miles (two sections), the total depth (TD) is close to 19,000 feet. Note: the oil industry's definition of TD is how many feet of pipe is used to reach the "end" of the well; it is not simply the "depth" at which the formation is reached. It can be confusing, but for the roughneck it makes sense. He is simply pushing pipe; he may/may not be aware of whether it is still vertical or horizontal; all he knows is how much pipe needs to be pulled if a bit needs to be replaced. Obviously there is much more to this, but that's about as much as I know.

8. Fracture stimulation ("frac, frac'd, frac'ing."  Perhaps the best spelling:  fracking).

It appears the norm for fracture stimulation in the Bakken is now (October, 2009) 20 stages or more. BEXP advocates 20+ stage fracture stimulation and was the first to use 28-stage fracture stimulation (the Brad Olson well west of Williston). WLL announced plans for a 24-stage fracture stimulation on a Three Forks Sanish well in late October, 2009. The announcement suggested deploying this many stages was fairly new/unique.

Some say we will soon see 32-stage fracturing and, eventually, even 60-stage fracture stimulation. November 7, 2009.

Trade article on fracturing that set a milestone, November 6, 2009.

Nice review, November 6, 2009.

Nice example of a well that was fractured almost a year after it was completed, changing a very marginal well (IP = 49) to a respectable showing (flowing at 340 without a pump after fracturing). November 13, 2009.

9. Re-Fracture

It appears re-fracturing is going to be the third leg of the 3-legged stool: horizontal drilling, multiple-stage fracture stimulation, and re-fracturing to increase production of older wells.

10. Pipeline Capacity

The "chokepoint" in the Williston Oil Basin is the pipeline capacity to ship the oil out of state to refineries. See discussion here. Two years ago (2007), producers were losing $12/barrel due to lack of capacity. Since then, much pipeline capacity has been added. This past August (2009), North Dakota was shipping about 230,000 bbls/day. This compares to 180,000 bbls/day in August, 2008; and, less than 100,000 bbls/day in August, 2005. Capacity is expected to reach 350,000 bbls in 2010 when new pipelines come on-line. The new EOG railroad terminal at Stanley, operational December 31, 2009, added another 60,000 barrels, to make the takeaway capacity 410,000 barrels.  In March, 2010, it was announced that another railroad/oil terminal would be built at Dickinson, ND, and would add another 60,000 barrels of capacity. That would bring the total to 470,000 bbls/day. The new Dickinson terminal is expected to be operational by October, 2010. Some analysts expect North Dakota could ship as much as 400,000 bbls/day within five years. Comment: if "they" reach 360,000 bbls in 2010, "they" can certainly reach 400,000 bbls shortly thereafter. March 6, 2010.

11.  Focus on oil

Those in the Bakken are, for the most part, focused on oil. However, there are a few producers going after natural gas. The predominant gas player in the Bakken is XTO. Natural gas wells are typically very shallow, maybe 1,000 - 2,000 feet and do not last very long. Oil wells, on the other hand, are very deep, and last much longer. XTO has been bought by XOM. January 24, 2010.

12. Enhanced oil recovery (EOR).

Water flooding is the first method of EOR, followed by CO2 injection. Prior to EOR, the field is unitized which required permission of the NDIC. An animated video of EOR can be found at this site.

13. Why is North Dakota oil worth less than WTI?

North Dakota oil is "sweet oil" and about the same quality as the benchmark, West Texas. However, historically, the capacity of the pipelines has not matched the output of the wells. The pipeline companies historically have charged a premium to carry oil out of the state. The premium can be a much as $10 to $20/barrel. With EOG shipping oil by railroad tank car (first oil train departed Stanley, ND, on December 31, 2009) and additional pipeline capacity and efficiency (mostly by Enbridge), the state industrial commission anticipates that capacity to ship oil and output should be more evenly matched by mid-2010. I don't think that balance will last more than a few months if oil prices remain high. [Update: the spread worsened in 2010 - 2011 due to over-supply of oil at Cushing, Oklahoma, where most of the oil is shipped. -- February, 2011.]

14.  What cities and towns in North Dakota are most affected by the Bakken?

Williston (northwest) and Dickinson (southwest) are the two largest cities in "the Bakken." Next comes Watford City, Stanley, and Bowman. Smaller towns include Tioga (home of the first well in North Dakota, discovered by Hess in 1951), New Town, Alexander, and Ross. 

My gut feeling is that the majority of oil-related companies have their major regional operations facilities in Williston. Schlumberger, Halliburton, and Sanjel have major operations in Williston.  Halliburton announced a $20 million expansion to their facility in 2009. There was talk at one time that because it was difficult to convince engineers to move their families to Williston, some companies were moving engineers and "regional headquarters" to Minot. Minot, of course, benefits indirectly from the oil activity but is a bit too far east to be directly involved.

Dickinson has an interstate (I-94) running through it and is more closely located to traditional historical sites, such as Theodore Roosevelt National Park, the South Unit. Watford City is within a few miles of the North Unit.  US Highway 2, passing through Williston to Montana, is now a 4-land divided highway across the entire state of North Dakota, and Montana has begun to widen US Hwy 2 in their state.

Those with families looking for work in "the Bakken" would probable prefer to be in Williston or Dickinson: more established school districts and a bit more opportunity for the non-working spouse and the children; better medical facilities; etc.

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January 24, 2010: North Dakota continues to have the lowest unemployment in the nation -- 4.4%.

October 28, 2009: North Dakota was number four (#4) in the United States in last month's oil production. There are three states vying for this fourth position for annual production: Louisiana (not including off-shore), Oklahoma, and North Dakota. In the past few months, North Dakota has surpassed Oklahoma and has surpassed Louisiana on at least one occasion. The top three states whose status is assured for the immediate future: Alaska, Texas, California.

Quick 2-page overview of the oil industry in North Dakota (pdf).
Crude Oil Production, United States, EIA

Oil production in North Dakota is concentrated in the Williston Oil Basin (or Williston Basin) named after the city that sits pretty much in the geographic center of the basin: Williston, North Dakota.

The first oil well in North Dakota was the Clarence Iverson #1 well drilled in 1951 near Tioga, ND, fifty miles driving distance from Williston. Since then, oil production in North Dakota has participated in "boom and bust" cycles of the oil industry.

In 2000, the oil companies combined two relatively new technologies, horizontal drilling and fracture stimulation, to target the Bakken formation in the Elm Coulee oil field (eastern Montana) in the Williston Basin. In 2007, that technology was brought to North Dakota and a new era in North Dakota oil production began.

"The Bakken" has become synonymous with "the Williston Basin," which is not accurate. The Bakken is only one of several formations that produce oil in the Williston Basin. Some of the more familiar formations are: the Madison, the Lodgepole, and the Red River. However, with horizontal drilling and fracture stimulation, the Bakken formation is now economically viable.

Stratigraphic Chart (geologic formations) (pdf) (click on chart to enlarge)

Recently, Harold Hamm, CEO of Continental Resources (CLR) has opined that the Three Forks Sanish (TFS) formation below the Bakken is another formation that does not communicate with the Bakken and is subject to the same technology.

Speaking of Harold Hamm, he opined in November, 2009, that he thinks there could be double the amount of recoverable oil in "the Bakken" that the USGS estimated.

There is some exciting news coming out of the Lodgepole formation, including less expensive conventional, vertical wells. One well, almost inside the Dickinson, ND, has targeted the Lodgepole with success. A second well is being drilled. Teegue opined on the Lodgepole some time ago.

In mid-November, 2009, state officials said that another formation may be amenable to the new technology, the Birdbear formation. Producers agree but say that their focus will be on the Bakken and the TFS for the foreseeable future. 

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Other sites of interest

Shale Oil, heavy advertising site but nice links
The true significance of the Bakken, long video but well worth it
Parshall Oil Field, Discovery of the Year, September, 2009
Bakken Breakout, article, 2009
Early History of Oil in the Williston Oil Basin
10th Edition of Tappin' the Bakken (Montana), November, 2009

Updated July 21, 2011.