Giant Elm Coulee was breakout find

Bakken Success Beckons Players

American Association of Petroleum Geologists (AAPG)

Shale plays such as the Barnett, Fayetteville, Marcellus and more continue to excite oil and gas operators and garner considerable ink in the mainstream press.

But there's a new kid in town.

It now appears that the relatively low profile Bakken shale play in Montana and North Dakota has the potential to become the Big Daddy of them all.

The U.S. Geological Survey - using a geology-based assessment methodology (see related story) - estimated mean undiscovered volumes of 3.65 billion barrels of oil, 1.85 tcf of associated/dissolved natural gas and 148 mbo of natural gas liquids in the Bakken formation of the Williston Basin province in North Dakota.

It's the largest continuous oil accumulation the agency has ever assessed, according to AAPG member Rich Pollastro, geologist and Bakken formation task leader at the federal agency.

Pollastro noted a continuous accumulation is one that is assumed to have hydrocarbons everywhere as opposed to a conventional, or discrete, accumulation with a distinctive hydrocarbon-water contact.

The widespread Upper Devonian-Lower Mississippian Bakken formation, which extends even beyond the United States into the Canadian provinces of Saskatchewan and Manitoba, is made up of an upper and a lower shale member and a mixed siliciclastic carbonate middle member, which is ordinarily referred to as a dolomitic sand or a sandy dolomite.

Both the upper and lower shales are organic-rich marine shale of rather consistent lithology, according to the USGS. These shales are the petroleum source rocks as well as part of the continuous reservoir for hydrocarbons produced from the Bakken formation.

Findley's Eureka Moment

In the late 1980s and 1990s, the upper Bakken was the focus of considerable activity, but the wells were marginally economic and difficult to produce. Consequently, it usually was looked on as a bail-out zone rather than a target.

That changed dramatically beginning in 1995 when explorer Dick Findley of Prospector Oil Inc. - who later would be named AAPG's Explorer of the Year - determined there was good porosity and a likely oil zone in the fractured dolomitic middle section. This Eureka moment eventually led to the development of the giant Elm Coulee oil field in the Bakken in eastern Montana.

The super-big assessment numbers the USGS released recently have raised more than a few eyebrows in the oil and gas community, but the consensus appears to be there truly are hydrocarbons aplenty awaiting the drill bit.

"There's no question there's a tremendous amount of oil in place in general in the Bakken shale," said Bud Brigham, chairman, president and CEO of Brigham Exploration.

He noted the company holds 240,000 acres total in the Bakken in Montana and North Dakota.

"We're still growing our acreage position, with maybe 50 brokers in the field," Brigham said. "We have a rig running continuously drilling wells east of the Nesson anticline, and we anticipate drilling more wells west of the anticline in western North Dakota and Montana."

Complex Considerations

Drilling in this play is not a cheap undertaking.

It requires horizontal wells that go down 10,000 feet vertically and then reach laterally into the dolomitic middle Bakken member for about another 10,000 feet to tap the oil from the pores and fractures. Well costs tally from $5 million to $6 million, depending on completion work and other factors.

Horizontal drilling alone is not the key to making the play work. The defining factor to efficiently produce maximum oil is multi-stage fracing, which entails partitioning the long lateral into segments and stimulating these segments independent of one another. The sections are then co-mingled and produced all at once.

"We get better results using multi-stage fracing versus fracing the lateral all at one time," said Brent Miller, operations manager for the Williston Basin at Whiting Petroleum. "You get more effective fracture stimulation.

"Swell packers are used to separate the lateral into separate pieces so they can be stimulated separately," Miller said. "Swell packers go back two or three years; EOG was the first to use this technology in the Bakken, and it's just now starting to take off."

EOG has established a major presence in the play, and its discovery well at Parshall Field in Mountrail County in northwestern North Dakota had an impact on the USGS study.

"This was a surprise discovery at Parshall in that this success was outside the Bakken oil window that was previously understood - it was to the east of that," Pollastro said. "It was outside the area of what was thought to be the continuous accumulation.

"We had to re-establish the area where the oil generation window for the Bakken was to do our assessment," he continued. "From the oil taken from those wells, we think it was generated in place. That's the model I developed - some agree and some have a different story."

The Right to Drill

This part of the world is rife with environmentally sensitive lands, so permitting issues will be front and center as the play progresses. Much of the area is under the aegis of the federal government along with other agencies.

Kodiak Oil and Gas, which has Bakken play experience at Elm Coulee, is assembling a lease block that is solely within the bounds of the Ft. Berthold Indian Reservation in North Dakota's Dunn County.

"The agencies involved are the BLM and the BIA (Bureau of Indian Affairs), and they're generally very cooperative," said AAPG member Jim Catlin, chief operating officer at Kodiak, who noted that a great deal of the Bakken is on Indian lands.

"No wells have been drilled on the Fort Berthold Reservation for more than 25 years," Catlin said, "and everyone is trying to catch up to how fast this thing has developed.

"All applications to drill go from the BLM to the BIA, which is the surface management agency, and they're not staffed up yet to completely do environmental assessments, so the companies are doing that part," Catlin noted. "Since there haven't been any wells drilled there recently, this is new, and we're working through the procedure and the best way to do it.

"We anticipate as we progress, the permitting process will become much smoother."

Big Plans Prepared

Kodiak looks forward to receiving its first Fort Berthold drilling permit shortly, and it has big plans.

Drainage areas have not yet been determined, but the company envisions having more than 100 locations in the event of 320-acre spacing.

"One thing that's critical as the play moves along is infrastructure," noted AAPG member Russ Cunningham, Williston Basin exploration manager at Kodiak. "There are a lot of pipelines being built now, and we need both gas lines and oil pipelines.

"Plans are being made by some operators, and we'll be looking into gas gathering systems," he said. "There's not only a fair amount of gas, but the gas is very rich, so there are a lot of liquids that can be extracted. EOG and Marathon are already building liquids plants and gathering facilities."

Miller at Whiting emphasized it will take a huge number of wells to develop the volumes of hydrocarbons cited in the USGS study.

"Some of that will be fairly marginal stuff so it's going to take some pretty high prices to be able to exploit all of that potential," Miller said. "I think it actually may be there if prices stay high and you can drill these expensive wells and get some more marginal production versus what some operators are making in sweeter spots in the basin.

"Most of the Bakken is not going to be in the sweeter areas," Miller noted, "and the high cost is going to take some real high tech drilling and completions to make it economic - and high prices to support the high drilling and completion costs in the Williston Basin."

For now, it's full speed ahead.

Brigham is drilling its sixth well, and it's budgeted to drill seven operated wells in the North Dakota part of the Bakken this year - in addition to participating in 44 non-operated wells.

"This is certainly the most exciting oil play we've been involved in," Brigham said. "It looks like it could be two times the areal extent of the Barnett play and maybe as many wells ultimately to be drilled.

The folks at Kodiak are equally enthusiastic.

"With time, it looks like it will get better and better," Cunningham said. "It's extremely exciting, and it's going to be really big."

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