ND's Bakken used as model for other oil plays

By JAMES MacPHERSON

BISMARCK, N.D.

Know-how gained from North Dakota's once-perplexing Bakken shale formation is being used to exploit other onerous oil plays across the globe.

Pushed by high crude prices, companies in just four years have nearly perfected technology to tap oil trapped in a thin layer of dense rock nearly two miles beneath the surface in western North Dakota.

Unlocking the Bakken using advanced horizontal drilling and hydraulic fracturing techniques has propelled the state from the nation's ninth-largest oil producer in 2006 to its fourth-largest today. A record number of rigs are piercing the state's oil patch.

Oil companies and countries a world away have taken notice of North Dakota's success, said Lynn Helms, director of the state Department of Mineral Resources.

Companies say they are aiming to apply technology learned from the Bakken to geologically similar shales in China, France, Poland, Canada and in some U.S. states, including Wyoming, Utah and Colorado. Companies already have used Bakken technology to successfully tap the rich Three Forks-Sanish formation, directly below the Bakken.

"We've become the world research center for unconventional plays," said Helms, who recently hosted a contingent of Polish officials sent to study North Dakota's oil patch.

Initially developed to exploit gas shales, horizontal drilling and hydraulic fracturing were first used in North Dakota early in the decade. They flopped.

"The first attempts were failures, but by mid-2006 we had the first successes," Helms said.

The Bakken, which ranges from a few feet thick to 80 feet, is sandwiched between layers of loose shale. Its rock consists of sandstone and siltstone, with microscopic pores that contain the oil.

To capture the crude, companies drill down nearly two miles then angle the well sideways for about another two miles. A pressurized concoction of water, chemicals and sand is injected to the horizontal portion of the well to break open oil-bearing rock. Fissures, held open by injected sand or ceramic materials, provide a pathway for oil to flow to the well. So-called fracture stimulation can be done a dozen or more times at each well.

Jim Ehrets, a Denver-based geologist with Headington Oil Co., of Dallas, said it was known for more than 50 years that the Bakken held vast oil reserves but the price of oil didn't push demand enough to develop technology to tap it.

Normally secretive oil companies began sharing information amid skyrocketing crude prices, Ehrets said. It was the first time he'd seen that level of cooperation among companies in his three-decade career, and "There's no question it was accelerated by high oil prices," he said.

"The technology has come a long ways in a short time and is very well known now," Ehrets said. "But it continues to be tweaked and fine-tuned."

James Bowzer, a vice president for Marathon Oil Corp., said the Houston-based company has invested more than $1 billion in the Bakken and intends to invest another $2 billion.

Oil companies have pierced the Bakken for decades using traditional vertical wells, Bowzer said. Advanced drilling techniques and hydraulic fracturing have allowed Marathon and others to get oil from the Bakken's rich horizontal layer, like sucking the creamy filling out of a cookie by poking through it only once.

"The geology has always been there and the technology has finally caught up," Bowzer said. "It's no secret anymore. People are openly sharing what they know about drilling technology."

The Bakken also has helped spur advancements in rig and drill bits, which must penetrate "tombstone-type hard rock," Bowzer said. The time needed to drill a well in the Bakken has dropped from 55 days four years ago to about 20 days now.

Marathon intends to use techniques learned from the Bakken to develop similar formations around the world, including in Poland where the company holds an interest in more than 2 million acres atop a shale play that resembles the Bakken, Bowzer said.

Jon Pepper, a Hess Corp. vice president, said his company is experimenting with Bakken technology on its holdings in China and France.

"It appears (the China formation) may be somewhat analogous to the Bakken," Pepper said. "We're seeing if lessons learned from the Bakken may apply there."

Hess, formerly was known as Amerada Hess, is based in New York. Amerada was the first company to strike oil in North Dakota in 1951, using traditional vertical wells.

"We're certainly one of the pioneers in North Dakota, if not the very first," Pepper said.

The company has invested more than $1 billion developing its Bakken holdings and plans to invest another $1 billion annually over the next five years, he said.

"Our core unconventional holding is the Bakken," Pepper said. "That's where we've been operating the longest and where we have plans to dramatically increase production. We're learning lessons there we can leverage around the world."

Ehrets, the Headington Oil geologist, said shale formations worldwide are getting attention largely due to the success in the Bakken, which the U.S. Geological Survey has called the largest continuous oil accumulation it ever has assessed.

"It's logical that with the learned expertise from the Bakken that all of the bigger boys are searching worldwide trying to find the other Bakken," he said.

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