$9,000/Acre -- Zenith Oil Field -- Tyler Formation (?) -- North Dakota, USA

Updates

April 5, 2011: Yesterday evening, the Stark County Zoning Board approved rezoning a 30-acre parcel of land to industrial from agricultural at Whiting's request.

Approved: A request by Whiting Oil and Gas Corp. to rezone about 30 acres from agricultural to industrial for an oil terminal site, temporary liquid site and a fresh water storage site.

As noted below, Zenith oil field is in Stark County, and the $9,000/acre tracts are just 10 miles west of Dickinson.

As a reminder:

The Tyler formation, according to the NDIC director Lynn Helms, extends well past the North Dakota borders, west into Montana and south into South Dakota. Based on stratigraphic maps, the Tyler formation may be even thicker than the Bakken in some areas. If you are interested in looking at the Tyler formation, simply "google" it. You will be surprised by the number of hits. The Tyler has accounted for about one percent of all oil produced by North Dakota to date; until recently, the Bakken had accounted for about six percent of all oil produced by North Dakota since 1951.

Original Post

The results of the February 21, 2011, North Dakota land lease sales were quite uneventful except for four tracts of land in Stark County which were acquired for the bonus price of $9,000 acre, clearly one of the highest bonuses paid in recent history, and I would wager to say, the highest bonus paid for non-Bakken interests. [Update: I lost that wager. I notice that at the North Dakota state land lease in May, 2010, Summit Resources paid a $12,500 bonus/acre for an 8-acre tract in the very same area -- section 24-140-99. Also, note: these are bonuses of public record. I have no idea what private individuals may be getting.]

Because this $9,000/acre has no conflicting details, such as other producing wells or other assets, this may be the new record paid for a mineral acre in North Dakota.

This is what I posted earlier:

Stark County:

• This is the county where WLL has recent interest
• Many tracts sold; almost all acquired by Clear Creek Resources, LLC
• Almost all under $500/acre; a couple for $800/acre
• With one huge exception: Empire Oil paid $9,000/acre for five separate tracts (four 80-acre tracts; one 60-acre tract); sections 23/26-140-99 and section 1-139-99. These tracts are in the Zenith field, and there is absolutely nothing on the GIS map server from the current boom that would give any hint of the reason why these tracts sold for this amount. A Tyler-pool vertical well spudded in 1984 produced 120K over its lifetime; a Tyler-pool vertical spudded in 1981 produced 116K over its lifetime; and (this might be the reason), the Tyler-pool vertical well spudded in 1984 has produced 608,562 bbls to date and it is still producing at 2,000 bbls a month, and no decline for the past several years -- in fact, it has increased over the past few years.

Specifically,

• 10752, New Millennium Resources, Inc. (current operator), Polanchek 8-34, spudded 5/84, is a vertical well targeting the Tyler A formation (which I believe is synonymous or similar to  the Heath formation). Total depth was 8,285 feet (about the depth of the vertical portion of a Bakken well), no horizontal, and had a huge IP of 323 for a vertical Tyler well.

This well continues to produce at 2,000 bbls/month. To date (as of 2/11) it has produced over 600,000 barrels of oil. Although the price of oil has averaged well under $75/bbl the last 26 years, if it had, this well would have generated $46 million. This shows the potential of wells in North Dakota.  The production is one thing, but the longevity is something else: 27 years this May, 2011. In addition, up until 2002, it was producing about 800 bbls/month. Starting in 2009, it was producing 2,000 bbls/month.

Except for one month in 2000 (18 days) and one month in 2003 (11 days) the well has produced 28 - 31 days of every month since it was spudded, suggesting that there has been no significant work-over since it was drilled. The months following those short months in 2000/2003 did not reveal any increase in production, again suggesting that no major work was done at that time.

I do not know for whom Empire Oil might be working, but as noted earlier, Whiting has shown a recent interest in this area.

For fuller coverage of the Tyler formation, see the sidebar at the right (other formations) or click here (same links). North Dakota separates these three formations (though they are very close to each other): Tyler, Tyler A, and the Heath.