Bakken Potential? -- North Dakota, USA -- Williston Oil Basin

From SeekingAlpha.com:

A forty-year independent oil entrepreneur with a conservative financial streak, [Whiting Petroleum] Chairman James Volker's data points:

• 8.4 million acres as providing for 39,000 wells on a spacing of six for each 1280 acre unit
• A mid-range 300,000 barrel reserve for each well, almost 12 billion barrels recoverable
• Comparable in size to the Prudhoe Bay discovery that made Alaskan oil famous

Other views of the North Dakota Bakken:

• USGS survey, 2008: 4 billion barrels recoverable
• Harold Hamm, CEO, CLR: 20 - 24 billion barrels recoverable (Three Forks + Bakken)

The 300,000 barrel reserve is very conservative (of course that's an average). Some use 500,000 barrel reserve for Bakken/Three Forks wells. Estimates for wells in the best Bakken run as high as 900,000 barrels over 30 years.

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The rest of this posting is just back-of-the-envelope doodling. Just playing around with the figures. I don't recommend anyone reading past this section; it's just for my benefit, sort of like imagining that I'm playing the lottery. Smile.

Another way of looking at Mr Volker's data:

3 wells/section (640 acres) * 300,000 bbls/well * $100/bbl -->  $90 million/section or $140,000 acre.

20 acres at $10,000/mineral acre would cost $200,000.  Those 20 acres will generate $2.8 million over the course of 30 years (at the wellhead, with lots of tax angles) at $100/bbl using 300,000 as the EUR.

Will a $200,000 house investment pay you $2.8 million over the course of a lifetime? And this assumes oil stays at the $100/bbl range.

I don't see much mineral acreage going for as much as $10,000. And a lot of the core Bakken wells will get double to triple 300,000 bbls over 30 years.

$200,000 x 0.06 = $1,000/month interest. 20/640 = 3%. Three wells leveling off at 1,200 bbls/month --> 1,200 bbls/month * 3% * $100/month --> $3,600/month.