"Unconventional" Gas Plays

More information from the online "World Oil Magazine" on the "Shale Gas" plays in the United States. (source)

Peter

SPECIAL FOCUS: NORTH AMERICAN OUTLOOK- UNCONVENTIONAL RESOURCES
Unconventional plays grow in number after Barnett Shale blazed the way
The Haynesville and Marcellus are becoming exciting new gas plays, while activity in the Woodford and Fayetteville continues.
Katrina Boughal , Technical Editor

Unconventional gas plays in the US have been booming since technological advances increased production in the now-famous Barnett Shale. Horizontal drilling and fracture stimulation in the shale source rock, as opposed to the sandstone/limestone/dolomite reservoir rock, have proved to be successful not only in gas plays like the Barnett, Fayetteville and Woodford, but also in the Bakken-a primarily oil-rich formation.

Resources that were previously thought to be unrecoverable are now being reassessed and, in some cases, rediscovered. Many shale plays have been producing a small amount of gas for years (the Indiana and Kentucky New Albany Shale since the late 1880s), but with the Barnett example, they are becoming more successful. Hot plays in the industry include the Louisiana/Texas Haynesville and Bossier Shales, and the Marcellus of Pennsylvania/Appalachia. The Williston Basin Bakken Formation has also gained popularity after a recent reassessment by the USGS.

HAYNESVILLE
The fairly recent Haynesville gas play, having garnered attention over the past few months, is an Upper Jurassic formation overlain by the Cotton Valley Group, and lies over the Smackover Formation. The Haynesville is an ultra-low permeability shale, and is focused in northwest Louisiana and East Texas, particularly in Caddo, Bossier and DeSoto Parishes, but also to a lesser extent in Red River and Sabine Parishes, and Harrison and Panola Counties, Fig. 1. The Haynesville Shale underlies the Bossier Shale (part of the Cotton Valley Group), and they are sometimes referred to as the same unit or related units. 2 Deeper than most shale gas plays, the Haynesville is located at depths ranging between 11,000 and 13,000 ft. 3

Fig. 1 . Map of the Haynesville Shale play (shaded). 1
Chesapeake is a large participant in the Haynesville play, holding about 550,000 acres as of late June 2008, with plans to acquire more acreage. Chesapeake entered a joint venture with Plains Exploration and Production, and the companies plan to drill about 600 wells in the Haynesville in the next three years. Chesapeake is estimating a mid-point estimated ultimate reserve of 6.5 Bcf, and their initial horizontal production rates are encouraging for the play.
“The initial production rates on the eight horizontal wells we have completed have ranged from 5 to 15 MMcfd on restricted chokes at flowing casing pressures of up to 6,500 psi,” said Chesapeake CEO Aubrey K. McClendon. 4

Petrohawk is also an active participant with about 275,000 acres, and completed their first horizontal well in the Haynesville in late June 2008. The Elm Grove Plantation #63, drilled in Bossier Parish, encountered about 212 ft of Haynesville Shale, and produced at a rate of 16.8 MMcfd. Completion of Elm Grove Plantation #63 included 11 stages of fracture stimulation. Petrohawk is drilling three horizontal wells, and expects to be operating six rigs in the Haynesville by mid-September 2008. 5

Companies are scrambling to lease plots in the Haynesville, with Forest Oil announcing in late June 2008 a net holding of 90,000 acres in the area. 6 GMX Resources added 7,300 net acres in early July, bringing its total acreage to 27,500. 7 EnCana has about 325,000 acres in the Haynesville, and completed a horizontal well in February with an initial production rate of 8 MMcfd. 8

FAYETTEVILLE
A few years ago the Fayetteville Shale experienced an upswing in interest somewhat akin to what the Haynesville is experiencing now. The Fayetteville of Arkansas is a Mississippian formation on the eastern end of the Arkoma Basin, with thicknesses varying between 50 and 300 ft and drilled at depths ranging from 2,000 to 6,000 ft. Thickness in the Fayetteville differs from east to west, at about 50 to 75 ft thick in western Arkansas to about 300 ft at the eastern edge of the Arkoma Basin. The formation is productive from its middle to base because the lower section is rich in organic material, with chert and siliceous interbedding. 9 The unit is thermally mature, and is differentiated from surrounding units by high radioactivity and resistivity signatures. 10

The Fayetteville is found in multiple eastern and central Arkansas counties, including Cleburne, Conway, Faulkner, Franklin, Jackson, St. Francis, Pope, Prairie, Van Buren, White and Woodruff Counties. The Fayetteville is about the same age and is seen as a geologic equivalent to the Barnett Shale near Fort Worth.

The Fayetteville followed the Barnett in production technology. As with other shale gas plays, the Fayetteville was previously known to be a gas-bearing formation, but only produced when horizontal drilling and fracture stimulation were introduced. 8 Some 460 of the over 500 producing wells in the Fayetteville are horizontal, and total production from the shale has reached, and likely exceeded, 52 Bcf. 11

Rig counts in the Arkansas Arkoma Basin have increased dramatically in the past two years. In August 2006, the rig count hovered at slightly over 20. In early July 2008, the count was at 59 operating rigs, with most located in Van Buren, White and Conway Counties. Southwestern Energy was operating 18 of the 59 rigs (about 31%) in the Arkansas Arkoma Basin during the first week of July 2008. 12 Southwestern, one of the most dominant players in the region, owns about 851,100 acres in the Fayetteville area, and has completed 557 wells in the play as of March 2008, of which about 88% were horizontal. During the company’s first quarter 2008, estimated 2007 production from the Fayetteville was 53.5 Bcf. 13

Chesapeake holds the largest land area in the play with 1.1 million acres, and in March 2008, had a net production of 130 MMcfd from the Fayetteville. Chesapeake had 12 rigs operating in March 2008, and plans to escalate drilling activity to 25 rigs in the play by early 2009. 14

MARCELLUS
In 2002, the USGS released an assessment of the undiscovered oil and gas in the Appalachian Basin Province. The Marcellus Shale was characterized as an individual assessment unit in the Appalachian Basin region that contained gas resources of about 1.9 Tcf. 15

The Marcellus had been fairly quiet until recently, when in late 2007 Range Resources announced horizontal well test rates from 1.4 MMcfd to 4.7 MMcfd. Shortly after, in January 2008, Pennsylvania State University and the University of New York at Fredonia released a report estimating recoverable reserves at 50 Tcf. Since then, The New York Times and USA Today have run stories on the Marcellus and the formation’s producing potential.

The Marcellus Shale is part of a large suite of rocks known as the Devonian shales, and stretches NE-SW about 600 mi across several Appalachian states, including New York, Pennsylvania and West Virginia, Fig. 2. 16 The naturally fractured, dry gas-producing Marcellus covers an area of about 54,000 square mi, 17 and ranges in thickness from 50 to 200 ft. Like the Fayetteville, the Marcellus thins from east to west, with 200-ft sections in northeastern Pennsylvania and 50-ft sections in northern West Virginia, Ohio, Pennsylvania and western New York. The formation depth ranges from 5,000 to 8,000 ft below sea level. 18

Fig. 2 . Map of the Marcellus and Devonian Shales. 16
The organic richness of the Marcellus, however, decreases generally from north in New York to south in West Virginia. The thermal maturity of the shale is an estimated 1.5 to 3% vitrinite reflectance (Ro). 18

As of April 2008, Range Resources held about 1.15 million acres of the Marcellus play, and had drilled 10 successful horizontal wells with initial production rates ranging from 2.6 to 5.8 MMcfd. 19 Other players in the Marcellus include Atlas Energy Resources and Chesapeake (largest lease holder with 1.2 million acres). Atlas, whose drilling plan is focused primarily in southwestern Pennsylvania, announced in February that it had 21 producing vertical wells, with 6 more due to be completed and producing shortly. 20

Marcellus players face the problem of minimal public information on the area, and have to resort to academic papers and regional geologic information due to the lack of log data. Oilfield services and equipment in the area are also somewhat scarce, with only four or six Appalachian rigs capable of drilling horizontal wells. 16

WOODFORD
Activity in the Woodford Shale began in 2003-2004 as a vertical play, but quickly transitioned to horizontal wells after the Barnett became horizontally driven. 21
The Woodford Shale is located in Oklahoma on the western end of the Arkoma Basin, and ranges in age from Middle Devonian to Early Mississippian. The stratigraphic equivalent to the Bakken and Antrim Shales, the Woodford shows a wide range of thermal maturities from 0.7 to 4.89% Ro?. Although known to be a gas-producing formation, the Woodford may have the potential to produce oil as well, 22 and the silica-rich shale has provided a good environment for fracturing due to its brittle nature. 21

The Woodford has seen many players in the area including Newfield Exploration, Devon, Chesapeake and XTO Energy. Newfield has about 165,000 net acres in the Woodford, is looking to drill about 100 horizontal wells this year and had a gross production of 165 MMcfd as of February 2008.23 Drilling depths for Newfield have ranged from 6,000 to 13,000 ft, with lateral lengths to about 5,000 ft. 21 For a more in-depth discussion on the characteristics and production potential of the Woodford Shale, please see page 83.

BARNETT
No unconventional play article would be complete without a mention of the Barnett. The very well-known Barnett Shale is the gas play that introduced horizontal drilling and fracture stimulation techniques to the unconventional shale gas field, allowing other plays’ production potential to be realized. Indeed, every time a new shale gas play is discovered, it is compared to the Barnett, or is called the “next Barnett” or a “baby Barnett.”

The Mississippian Barnett in the Fort Worth Basin of Texas is about 6,500 to 8,000 ft deep, and thickens toward the northeast-from about 30 to 50 ft thick in the south to about 1,000 ft thick in the northeast. 24

At the end of 2007, the total number of Barnett producing wells over time was at about 8,960, with cumulative production of 3.69 Tcf and 11.6 million bbl of oil. The rate of production from 8,435 active Barnett wells in December 2007 was 3.524 Bcfd plus 7,477 bpd. From 2003 to 2007, horizontal wells have become the dominant well orientation. In 2003, about 21% of wells completed in the Barnett were horizontal; in 2007, about 94% were horizontal. 25

The Barnett continues as the giant that it has become in the past five years. The players list in the Barnett is exhaustive, with Devon, Chesapeake, XTO, Encana, EOG and others. Devon has drilled more than 1,300 wells in the Barnett since 2002, and produces nearly 600 MMcfd. 26

BAKKEN
The April 2008 USGS assessment of the Bakken Formation in the Williston Basin has caused a flurry of activity in the area, particularly because of the undiscovered, technically recoverable oil resource estimation-between 3.0 and 4.3 billion bbl. The large increase in the Bakken’s recoverable resources (formerly estimated by the USGS at 151 million bbl in 1995) is due to the same factor that has lead to expanding shale gas plays: advances in horizontal drilling and hydraulic fracturing.

The Upper Devonian-Early Mississippian Bakken is a continuous, 200,000-sq mi formation composed of sandstone, siltstone and dolomite bounded by two shale layers. Average porosity in the Bakken is between 8% and 12%, and permeability ranges from 0.05 mD to 0.5 mD. The Bakken is about 2-mi deep, and has a net thickness of about 6 ft to 15 ft. Key players in the region include EOG Resources, Whiting Petroleum, Brigham Exploration, Hess, Newfield Exploration, XTO and Marathon. 27 For a more comprehensive view on the Bakken assessment, please see World Oil June 2008, page 83.

OTHER PLAYS
There are a multitude of unconventional shale plays being assessed, and the following are a few from various parts of the US.
Utica. Located in New York, northern Pennsylvania, Quebec and Ontario, the Utica Shale is an Upper Ordovician reservoir with typical low permeability, high organic content and varying thickness-the formation ranges from 150 to 1,000 ft across New York. The Utica’s close proximity to the Marcellus makes it interesting, but recently drilled Utica wells have “not responded well to the normal shale fracturing practices.” 28 Forest Oil has acquired 269,000 net acres of the Quebec Utica, and in April 2008, reported 1 MMcfd production rates from two 4,800-ft vertical wells. 29

Chattanooga.

This Devonian shale formation extends across a large part of the US, although the gas play is centered in southern Kentucky, eastern Tennessee and northern Alabama, Fig. 3. Sources cite the Chattanooga as being an equivalent to both the Marcellus and the Woodford Shales, all of which are Devonian formations. 30,31

Fig. 3 . Map of the Chattanooga Shale play (shaded). 30
The USGS reported in 2007 on the petroleum system of the Black Warrior Basin in Alabama and Mississippi that encompasses part of the Chattanooga Shale. The USGS report focused on the carbonates and sandstones, and discussed the Floyd and Chattanooga Shales as source rocks alone-no unconventional shale gas assessment was released. The Chattanooga is a Devonian-age shale that is separated from the Mississippian-age Floyd Shale by a thin layer of chert and limestone, and they are often referred in relation to each other. The Alabama Chattanooga play lies in the eastern Black Warrior Basin, and is a thin unit with a Total Organic Carbon (TOC) weight percent range of 2.4-12.7. 32 The Tennessee Chattanooga play is relatively shallow compared to other gas plays with depths ranging from 1,500 to 2,000 ft. 33

In 2007, CNX Gas Corp. drilled a horizontal well in Tennessee with an initial production rate of 3.9 MMcfd. 34 Atlas Energy Resources announced in June 2008 the successful drilling of four horizontal wells in the formation. 35

Floyd. In close contact with the Chattanooga Shale, the Floyd play is situated in the Black Warrior Basin of Mississippi and Alabama. The formation is primarily shale, but also contains clay, sandstone and limestone beds, with chert and large siderite modules. 32 Found at depths from about 4,000 ft to 9,000 ft below surface level, 36 the Floyd thickens toward the northeast, with a maximum thickness of about 600 ft, and has a TOC percent weight of about 1.8. The Floyd is believed to be the source rock for the conventional reservoirs in the area. 32 Carrizo Oil and Gas drilled a horizontal well in the Floyd in July 2007,37 and Murphy Oil drilled several wells in 2006. 38 With minimal news concerning the Floyd in 2008, play activity seems to have slowed down.

New Albany.

Found in the Illinois Basin, the New Albany Shale is a mostly Devonian-aged formation (the top few feet of the unit are Mississippian) that spans Kentucky, Indiana and, to a smaller extent, Illinois. The New Albany can be correlated with the Antrim Shale of Michigan and Indiana, and the Chattanooga Shale of Tennessee. 39 The New Albany gas play has been focused in Kentucky and southeastern Indiana. Formation thickness varies-the shale is about 100 to 140 ft thick in southeastern Indiana and almost 340 ft thick farther southwest in the Illinois Basin. 40 The USGS released a report in 2007 on the Illinois Basin that assessed the undiscovered, technically recoverable gas resources of the New Albany Shale at 3.79 Tcf. 41 Aurora Oil and Gas reported an average production of 424 Mcfd from their New Albany holdings in the first quarter 2008. 42 CNX Gas drilled six wells in the New Albany in 2007 to determine reservoir information and future drilling locations. 34

As the Barnett proves to be continually successful, shale plays, oil and gas, are looking to be important in the future.
There are already whispers of the Haynesville being the next Barnett, and although those rumors have been heard before about other plays, expect to hear about the Haynesville, and the Bakken and Marcellus, in the months to come.

LITERATURE CITED
1 “Core leasing area: Haynesville Shale map,” Haynesville Shale Map, http://haynesvilleshalemap.com/, accessed July 7, 2008.

2 Welborn, V., “What is the Haynesville Shale?” Shreveport Times , July 7, 2008.

3 “Shale gas fever drives land drilling in US,” Platts Oilgram News , July 4, 2008, pg. 6.

4 “Chesapeake and PXP announce Haynesville Shale joint venture,” Yahoo Financial News, July 1, 2008, http://bix.yahoo.com/bw/080701/20080701006524.html, accessed July 8, 2007.

5 “Petrohawk Energy Corporation reports Haynesville Shale result and leasehold update,” Fox Business, June 30, 2008, http://www.foxbusiness.com/story/markets/industries/energy/petrohawk-energy-corporation-reports-haynesville-shale-result-leasehold-update/, accessed July 8, 2008.

6 “Forest Oil increases holdings in E. Texas, N. La,” Forbes.com, June 30, 2008, http://www.forbes.com/feeds/ap/2008/06/30/ap5169765.html, accessed July 10, 2008.

7 “GMX Resources Inc. announces Haynesville/Bossier Shale drilling to begin 3Q08,” Prime Newswire, July 7, 2008, http://www.primenewswire.com/newsroom/news.html?d=145868, accessed July 10, 2008.

8 Fuquay, J., “Chesapeake, EnCana, boost activity in Louisiana gas shale,” Star-Telegram , June 16, 2008.

9 Brown, D., “Barnett may have Arkansas cousin,” AAPG Explorer , Feb. 2006.

10 “The Fayetteville Shale play: A geologic overview,” Arkansas Business.com, Aug. 27, 2007, http://www.arkansasbusiness.com/article.aspx?aID=99154, accessed July 8, 2008.

11 Shelby, P., “Fayetteville Shale play of North-Central Arkansas: A project update,” presented at the AAPG Annual Convention, San Antonio, Texas, April 20-23, 2008.

12 “Baker Hughes US rig count- Summary report,” Baker Hughes- Investor relations- Rig counts, http://164.109.37.157/Reports/StandardReport.aspx, accessed July 11, 2008.

13 “Fayetteville Shale play,” Southwestern Energy Company, http://www.swn.com/operations/fayetteville.shale.asp, accessed July 8, 2008.

14 “Chesapeake reports Haynesville Shale discovery in Louisiana and announces CapEx increase,” OilVoice, March 24, 2008, http://www.oilvoice.com/n/Chesapeake_Reports_Haynesville_Shale_Discovery_in_Louisiana_and_Announces_CapEx_Increase/92f01da5.aspx, accessed July 11, 2008.

15 US Department of the Interior, US Geological Society, “Assessment of undiscovered oil and gas resources of the Appalachian Basin Province, 2002,” USGS Fact Sheet FS-009-03, February 2003.

16 Durham, L. S., “Another shale making seismic waves,” AAPG Explorer, March 2008.

17 Mayhood, K., “Low down, rich and stingy,” The Columbus Dispatch , March 11, 2008.

18 Milici, R. C. and C. S. Swezey, “Assessment of Appalachian Basin oil and gas resources: Devonian Shale- Middle and Upper Paleozoic total petroleum system,” Open file report series 2006-1237, USGS Reston, Virginia, 2006, pp.38-39.

19 “Range announces record first quarter results,” OilVoice, April 24, 2008, http://www.oilvoice.com/n/Range_Announces_Record_First_Quarter_Results/4c59a7ac.aspx, accessed July 11, 2008.

20 “Atlas Energy Resources, LLC increases estimated reserve potential from Marcellus Shale to between 4 and 6 Tcf,” Reuters, Feb. 21, 2008, http://www.reuters.com/article/pressRelease/idUS127932+21-Feb-2008+MW20080221, accessed July 14, 2008.

21 Brown, D., “Big potential boost the Woodford,” AAPG Explorer , July 2008.

22 Comer, J. B., “Reservoir characteristics and production potential of the Woodford Shale,” World Oil , August 2008, pp. 83.

23 “Newfield Exploration announces 2008 capital program,” Reuters, Feb. 4, 2008, http://www.reuters.com/article/pressRelease/idUS139442+04-Feb-2008+PRN20080204, accessed July 11, 2008.

24 Hayden, J. and D. Pursell, “The Barnett Shale: Visitors guide to the hottest gas play in the US,” Tudor Pickering, Oct. 2005, http://www.tudorpickering.com/pdfs/TheBarnettShaleReport.pdf, accessed July 10, 2008.

25 “Number of vertical and horizontal producer wells in the Barnett Shale as of Jan. 1, 2008,” Powell Barnett Shale Newsletter , March 27, 2008, http://www.barnetshalenews.com/documents/VHchart%201-1-08.pdf, accessed July 10, 2008.

26 “Operations- Barnett Shale,” Devon Energy, http://www.devonenergy.com/Operation/FeatuerStories/Pages/barnett_shale.aspx, accessed July 10, 2008.

27 Cohen, D. M., “USGS names Bakken play the largest oil accumulation in the Lower 48,” World Oil , June 2008, pp. 83-84.

28 Paktinat, J., Pinkhouse, J., Fontaine, J., Lash, G. and G. Penny, “Investigation of methods to improve Utica Shale hydraulic fracturing in the Appalachian Basin,” presented at the AAPG Annual Convention, San Antonio, Texas, April 20-23, 2008.

29 “Forest Oil announces significant gas discovery in Utica Shale…” Reuters, April 1, 2008, http://www.reuters.com/article/pressRelease/idUS134787+01-Apr-2008+BW20080401, accessed July 11, 2008.

30 “Chattanooga Shale natural gas field,” Oil Shale Gas, http://www.oilshalegas.com/chattanoogashale.com, accessed July 9, 2008.

31 “AMI Project,” Irvine Energy PLC, http://www.irvineenergy.com/projects/index.htm, accessed July 9, 2008.

32 USGS Black Warrior Basin Province assessment team, “Geologic assessment of undiscovered oil and gas resources of the Black Warrior Basin Province, Alabama and Mississippi,” Hatch, J. R. and M. J. Pawlewicz, compilers, USGS Digital Data Series DDS-69-I, 2007, 76 p.

33 “Domestic Energy announces Appalachian Shale plan,” Reuters, April 28, 2008, http://www.reuters.com/article/preeRelease/idUS139048+28-Apr-2008+MW20080428, accessed July 9, 2008.

34 “CNX Gas reports fourth quarter and full year 2007 results,” Reuters, Jan. 29, 2008, http://www.reuters.com/article/pressRelease/idUS140410+29-Jan-2008+PRN20080129, accessed July 11, 2008.

35 “Atlas Energy announces four successful horizontal wells in Tennessee’s Chattanooga Shale, and a net acreage position of 105,000 acres in the play,” OilVoice, June 21, 2008, http://www.oilvoice.com/n/Atlas_Energy_Announces_Four_Successful_Horizontal_Wells_in_Tennessees_Chattanooga_Shale/9fc6bbe0.aspx, accessed July 9, 2008.

36 “Floyd Shale potential of the Black Warrior Basin: Executive summary,” Mississippi Geological Society eBulletin , Vol. 55, No. 7, March 2007.

37 “Carrizo Oil & Gas, Inc. announces record production and third quarter 2007 financial results,” Carrizo Oil & Gas, Nov. 8, 2007, http://carrizo.mediaroom.com/index.php?s=43&iten=154, accessed July 10, 2008.

38 Edmonds, C., “New shales may be ready to deliver,” The Street, Feb. 22, 2007, http://www.thestreet.com/story/10340267/1/new-shales-may-be-ready-to-deliver.html, accessed July 10, 2008.

39 “New Albany Shale,” Indiana Geological Survey, http://igs.indiana.edu/Geology/structure/compendium/html/comp82hw.cfm, accessed July 9, 2008.

40 Comer, J. B., Hasenmueller, N. R., Mastalerz, M. D., Rupp, J. A., Shaffer, N. R. and C. W. Zuppann, “The New Albany Shale gas play in southern Indiana,” presented at AAPG Eastern Section Meeting, Buffalo, N.Y., Oct. 8-11, 2006.

41 US Department of the Interior, US Geological Survey, “Assessment of undiscovered oil and gas resources of the Illinois Basin, 2007,” USGS Fact Sheet 2007-3058, August 2007.

42 “Aurora Oil & Gas Corp. announces first quarter 2008 results,” Reuters, May 9, 2008, http://www.reuters.com/article/pressRelease/idUS248894+09-May-2008+PRN20080509, accessed July 11, 2008.

The Bakken Formation of Montana and North Dakota: Is It The Answer To Our Energy Needs?

It sounds to me as if the amount of oil recoverable from the Bakken has been greatly exagerated. Based on some knowledge of technology, geology, the oil industry, the USGS, and the kind of hype by people selling investment "advice", especially on the internet, I tend to believe the basic premise of this report. There is a lot of oil in the Bakken Formation, and some of it is economically recoverable with relatively new horizontal drilling and rock fracturing technology. Any oil, anywhere, is very attractive at today's $130 per barrel price. Even if the USGS "estimates" are correct, and you can be sure that is what they are, a best guess, 4 Billion barrels of recoverable oil is very significant. It is 40% of what was initially thought to be recoverable from the Prudhoe Bay Field on Alaska's North Slope, which is the largest oil field ever found in North America. Of course the Bakken Formation is not one simple oil field. It is primarily a layer of shale rock spread over a huge area, with many, many wells needed to produce that much oil. The Bakken Formation is not going to be a panacea for our energy crisis. There is one other article on this blog dealing with the Bakken Formation, see here Peak Oil? An Example Of How Technology "Discovers" More Oil
Peter


U.S. Says 400-Billion Barrel Bakken Oil Field a 'Myth'
By Keriann Hopkins CNSNews.com Correspondent June 18, 2008 (CNSNews.com) - source

Reports circulating on the Internet tell of an oil field spanning parts of western North Dakota and eastern Montana where 400 billion barrels of oil supposedly are just waiting to be tapped. However, the U.S. Geological Survey (USGS) tells Cybercast News Service that those huge estimates are "a myth."A USGS report issued in April estimates that there are between 3 billion to 4.3 billion barrels of oil in what is referred to as "the Bakken Formation" -- well below the 400 billion barrels discussed on the Web, but up from the previous estimate of 151 million barrels made in 1995.

Richard Pollastro, Bakken Formation task leader at the USGS, said the myth stems from a 1999 draft report -- never published -- by a now-deceased USGS employee, Leigh Price. Price estimated that the Bakken Formation holds up to 400 billion barrels of oil. To put that in perspective, Saudi Arabia, the world's largest oil producer, has about 260 billion barrels of known oil reserves. Price, however, died in 2000, before his study could be peer-reviewed and published, and the Bakken Formation became the fool's gold of the oil industry. "Unfortunately, in many instances, we are still trying to explain and defend our assessment versus the inappropriate and irresponsible posting of Dr. Price's 'draft report,'" Pollastro told Cybercast News Service.

According to Jonathon Kolak, a USGS scientist and information specialist, the discrepancy between Price's 1999 estimates and the agency's 2008 findings arises from the fact that Price was trying to assess the "oil generation potential" of the oil found in the pores of rocks and shale in the Bakken field, as well as the total content of how much oil might be pooling up - or "oil in place.""What Dr. Price was looking at was 'oil generation potential,' and then, from that, trying to make an estimate of 'oil in place,'" said Kolak. "Those terms are very distinct from 'undiscovered technically recoverable resources.'" The latest study, which was commissioned by U.S. Sen. Byron Dorgan (D-N.D.), is an estimate of how much "technically recoverable" oil and gas is available -- i.e, how much oil can actually be recovered using today's technology.

Kolas also explained that the 25-fold increase between the 1995 estimates and the 2008 assessment is due to two factors: an improved understanding of the geology and advances in drilling technology. "Our understanding of the geology improved significantly because of the time difference between the studies," he said. "There has been some drilling since then, there has been a lot more information that has come out, other people have conducted studies, and also USGS researchers have conducted studies. "Moreover, drillers are utilizing directional drilling in the Bakken fields, a way of drilling at an angle to tap previously unrecoverable reservoirs.

"If you've been out to western North Dakota, you don't need a USGS report to know that there's oil there because you can see from all the drilling activity that there's a lot of energy development going on in western North Dakota," Dorgan spokesman Justin Kitch told Cybercast News Service . Kitch admits that comparing Price's 1999 study to the April USGS study is like comparing "apples and oranges. "But certainly it's nice to have an up-to-date assessment of the amount of oil that's technically recoverable in the Bakken," he said.

In 2006, Marathon Oil bought 200,000 acres in the Bakken to drill over 300 wells. This past May, after the report was released, Texas-based XTO Energy bought 352,000 net acres in the Bakken Shale for $1.9 billion. The federal government, meanwhile, said only a small proportion of the oil available with today's technology is economically viable for recovery. "If you're drilling the Bakken, it's pretty easy to drill somewhere in there and at least see some oil, but the question is: Is there enough there to get out and actually be economically recoverable?" Kolak asked. At the end of 2007, about 105 million barrels of oil had been produced from the Bakken Formation. The USGS, meanwhile, considers any release or dissemination of Price's unpublished report to be "inappropriate and irresponsible."

Peak Oil? An Example Of How Technology "Discovers" More Oil

There is a lot of concern over the price of oil and gasoline. Everyone wants to end our dependence on "foreign oil". Others predict an imminent shortage of oil. Some want to replace oil altogether by using "bio-fuels", or "sustainable" alternatives. The following article illustrates how more oil in the United States, and soon, undoubtedly many other places, is being found and produced because of improvements in technology. It is an encouraging example. Unless of course you believe that global warming is caused by the burning of oil and gas.
Peter

Billions of barrels of oil found in Eastern Montana
By JENNIFER McKEE
Gazette State Bureau HELENA - The low point came when the things got so tight that Billings petroleum geologist Richard Findley flirted with the idea of taking a second job as a restaurant cook.He was working out of his basement, looking for oil in an Eastern Montana field almost nobody else wanted. Then, in 1996, he and his partner accidentally stumbled across a porous layer of dolomite 9,000 feet below ground at a site just a little west and north of Sidney.That serendipity turned out to be the largest on-shore oil discovery in the continental United States in better than 20 years. Today, the oil field Findley found - and the technology he helped develop to extract the oil - has made millionaires out of ordinary Montanans, has swollen state coffers and ushered in a new philosophy of oil prospecting worldwide."It's just been a fairy tale for a guy like me," Findley said.

About 15.7 million barrels of oil were pumped out of Montana in 2000. Five years later, production had more than doubled to almost 32.8 million barrels. The difference, said Tom Richmond, administrator of the State Board of Oil and Gas, is Elm Coulee, the field Findley found.Elm Coulee produced more oil in 2005 than the entire state combined produced just six years earlier. Elm Coulee has helped put Montana back on the map of oil production, said Dave Galt, head of the Montana Petroleum Association.

The story behind the discovery, Findley said, is being in the "right spot for the wrong reasons." But it's also the story of a man who, after years of struggle, found that a field most people thought was tapped out was, in fact, ripe for further tapping.The Williston Basin is a geologic formation beneath a good chunk of Eastern Montana, most of North Dakota, parts of South Dakota and the Canadian provinces of Saskatchewan and Manitoba. Within the basin is something called the Bakken Formation. The Bakken (rhymes with "talking") is a sandwich of two slabs of black shale surrounding a layer of limestone, siltstone, sandstone and dolomite, another kind of sedimentary rock.

The whole area was once part of a shallow inland sea, Findley said. The Williston Basin has seen some oil drilling for decades and geologists have long known that there is oil in the Bakken. But most drillers were focusing on the shale layers, and most early efforts were abandoned for a host of problems. Findley was aiming for another formation beneath the Bakken in the 1990s when he discovered something strange about the middle, dolomite layer.It was porous. If there are holes in the rock, there could be oil in the holes."It was a light bulb kind of thought and I thought, 'My gosh, the oil is in the middle member," Findley said. "When I saw that this was continuous for 50 miles, I called my partner (in Michigan) and I said, 'I think you'd better sit down. I think we found a giant oil field.' "

That Findley - or anyone else - was drilling for oil in the Bakken was somewhat unusual. Almost no one was drilling the field then, he said, and certainly not any major oil company."When we first started drilling this first well, the Bakken was a four-letter word," he said. "All the workers felt the Bakken was uneconomic."Even after Findley proved the area had oil - many billions of barrels of it - the Bakken had such a bad reputation, Findley jokes, that oil companies would hang up on him when he told them he found oil there.Eventually, he found a Dallas company called Lyco that believed enough in Findley's findings that it agreed to drill a well.

Getting oil out of the Bakken is not a matter of poking a hole in ground until you hit a soft spot full of oil. The oil in Elm Coulee is bound up in rocks, and that rock layer is wide but thin.It was Findley's idea to drill a well sideways - a technique called "horizontal drilling" in which prospectors drill down to the oil and then fan out their well thousands of feet to the side like the piping for an underground sprinkler. But horizontal drilling alone couldn't economically get the oil out of the ground. Findley also took his discovery to Halliburton, the industrial services giant, and engineers there figured out a way to both drill sideways and fracture the rock to release the oil.

Both horizontal drilling and fracturing had been done before, but never together, Findley said. Those combined technologies made Elm Coulee possible and are now being used in other fields across the globe. The technology has also changed the way engineers look at potential oil fields, Findley said, opening up oil-bearing rock formations to drilling that were never before thought economic.

Findley was born and raised in Corpus Christi, Texas. He was, by his own admission, "a beach bum" all his young life. Shortly before Findley was to graduate from high school, his dad asked him what he wanted to do with his life. Findley said he had no idea.Before World War II broke out, Findley's father had studied geology at Texas A&M. He suggested his son might enjoy the same."I asked, 'What's geology?' " Findley recalled.He went to Texas A&M, studied geology and became interested in the oil business. In 1975, he graduated with a master's degree in petroleum geology and took a job with an oil company in Denver working along the Rockies."But I realized I wanted to be an independent oil man," he said.

In 1978, Findley moved to Billings and took a job with Patrick Petroleum. Five years later, he started his own business, Prospector Oil Inc."Not realizing that I'd spend the next 20 years doing survival," he said. "But we did survive. My wife and I kept asking ourselves, 'I just didn't know how long we could survive in this business.' I did a lot of stupid things to stay independent in Billings."He worked out of his home, taking on consulting work to pay the bills. Findley never did take on a second job, although he once asked his neighbor, a restaurant owner, if he needed any extra help in the kitchen."There were a lot of lean times," he said. "(But) you just never knew each day, you could wake up and this is the day that you'd find a big oil field."

Findley's discovery has had huge effects. In Richland County, home to Elm Coulee, residents with oil royalties have literally been made millionaires.The state coffers are also thick with oil cash. In 1995, taxes on oil brought about $13 million into the state's checking account, said Terry Johnson, a principal financial analyst for the Montana legislature. Last year, that number had swollen to $92.7 million, and that's just tax on the oil. Oil companies also are paying more in state corporate income tax, Johnson said. Oil field workers and Richland County residents with oil royalties are paying more in individual income tax. Additionally, if any of the oil is drilled on state-owned lands, the royalties go in to a special account to support state schools. If the oil is drilled on federal lands, the state gets half the royalty."It's a pretty significant factor in state revenues," Johnson said.

The boom has been so big that the pipeline carrying Montana and North Dakota crude to Midwestern markets is at capacity and the largest company drilling in Elm Coulee has temporarily closed some wells because they have no way to sell it. The effects are especially stark in Sidney, the Richland County seat and closest town to Elm Coulee. While houses in much of the United States sit on the market for months, Sidney has a shortage, said Nick Jones, owner of Nick Jones Real Estate in Sidney. It's harder to find employees, said Gary Schoepp, owner of Action Auto, Sidney's Chrysler Dodge dealer. However, both Schoepp and Jones said that Sidney, which enjoyed a wild oil boom in the early 1980s, seems much more circumspect about the whole thing this time around.

Things have changed for the oil industry, too. A 2006 U.S. Department of Energy paper on the Bakken Formation ended by saying that new technology, like the kind Findley and Halliburton pioneered, means oil can be extracted from deposits previously dismissed as uneconomic. And things have changed for Findley, too. Suddenly finding himself the man of the hour, he has taken calls from oil prospectors around the world and traveled widely to provide expertise on potential new discoveries. He moved his office out of his basement in 1995 and now has an office in downtown Billings, although the office is still himself and his secretary.

He and his wife recently remodeled their home. They now have an indoor grill with a large fan to vent the smoke outside to accommodate Findley's love of cooking, especially barbecue."I have achieved my dream," he said. "I feel that I am independent today."For all the hubbub, Findley said renovating his home is the only way he and his wife, Lyn, plan on changing their lifestyle. The rest of the money Findley made from his discovery is going into an estate for the Findleys' children, 26-year-old Ben, who is pursuing a career in Seattle, and Leah, who just started her first year at Carroll College in Helena.

Findley also sounds a cautionary note. To state lawmakers, he says, don't get used to oil tax revenues. Oil wells run dry and with it, tax dollars. And to the users of oil, he encourages conservation and other kinds of energy, including nuclear energy. "We do have a lot of oil left to find," he said. "But our demand worldwide is increasing so rapidly, at some point our supply is going to flatten out." Findley worries about a crisis, where demand for oil, especially foreign oil, is significantly greater than the supply." At that point, it is going to be too late," he said. "We need to start today to do everything we can to decrease our dependence on foreign sources of oil."
Published on Monday, December 03, 2007.Last modified on 12/3/2007 at 1:52 pmCopyright © The Billings Gazette, a division of Lee Enterprises.

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