This Bloomberg News article appeared in the June 8 Houston Chronicle. - Dave
in Houston
http://www.chron.com/disp/story.mpl/...s/5824026.html
Huge ocean of crude lies 2 miles below North America
By ANTHONY EFFINGER
John Bartelson, who smokes Marlboro Lights through fingers blackened
with tractor grease, may look like an average wheat farmer. He isn't.
He's one of North Dakota's new oil barons.
Every month, he gets a check for tens of thousands of dollars from
Houston company EOG Resources, which drilled two oil wells on his land
last year. He says the day his first royalty check arrived was one to
remember.
"I smiled to beat hell, and I went to town and had a beer," Bartelson,
65, says.
His new wealth springs from the Bakken formation, a sprawling deposit
of high-quality crude beneath the durum wheat fields of North Dakota,
Montana and southern Saskatchewan and Manitoba. The Bakken may give the
U.S. - the world's biggest importer of oil - a new domestic energy
source.
Unlike the tar from Canada's oil sands, Bakken crude needs little
refining. Swirl some of it in a Mason jar and it leaves a thin,
honey-colored film along the sides. It's light - almost like gasoline -
and sweet, meaning it's low in sulfur.
Best of all, the Bakken could be huge. The U.S. Geological Survey's
Leigh Price, a Denver geochemist who died in 2000, estimated that the
Bakken might hold 413 billion barrels. If so, it would dwarf Saudi
Arabia's Ghawar, the world's biggest field, which has produced about 55
billion barrels.
Better technology
The challenge is getting the oil out. Bakken crude is locked two miles
underground in a layer of dolomite, a dense mineral that doesn't
surrender oil the way more porous limestone does. The dolomite band is
narrow, too, averaging just 22 feet in North Dakota.
The USGS said in April that the Bakken holds as much as 4.3 billion
barrels that can be recovered using today's engineering techniques.
That's a fraction of the oil that Price said should be there, but it's
still the largest accumulation of crude in the 48 contiguous U.S.
states. North Dakota, where Bakken exploration is most intense now,
won't become Saudi Arabia unless technology improves.
For decades, the Bakken was the fool's gold of the oil industry. The
name describes a geological formation that looks like an Oreo cookie:
two layers of black shale that bleed oil into the middle layer of
dolomite. It's named after Henry O. Bakken, the North Dakota farmer who
owned the land where the first drilling rig revealed the shale layers
in the 1950s.
All of the layers are thin - about 150 feet altogether - and none of
them give up oil easily. In older, vertical wells, oil would often flow
for a month and then fizzle.
Different angle
Now, companies like EOG are drilling horizontally. They go straight
down 10,000 feet and then put a slight angle in the mud motor, a
30-foot piece of tubing that drives the bit, so they hit the Bakken
sideways, making a horizontal tunnel as much as 4,500 feet long through
the dolomite.
Then they pump pressurized water and sand into the hole to fracture the
dolomite, making cracks for oil to seep through.
It eventually winds up in a pipeline that runs east to Clearbrook,
Minn., and then south to Chicago.
Several billionaires are at work in the Bakken. Harold Hamm's Enid,
Okla.-based Continental Resources has leases on 487,000 acres in
Montana and North Dakota. Hamm, who started out driving a truck, owns
73 percent of Continental, worth $7.9 billion.
The big winner so far has been EOG, formerly a subsidiary of bankrupt
energy trader Enron Corp. It drilled a horizontal well in western North
Dakota just north of Parshall - population 1,028 - in April 2006. The
well came online a month later and kicked out 1,883 barrels in the
first seven days. Unlike the older vertical wells, it's still going.
Northern Oil & Gas, a five-person company near Minneapolis, makes money
without actually drilling or operating wells.
It leases in promising areas like the Bakken and gets paid when someone
else uses the land to drill.
The other people doing well in the Bakken are the mineral owners under
the oil wells - folks like John Bartelson. Oil drillers have paid them
millions for right of access to the oil deposits.
"It'll crash again," Bartelson says, sipping on a late- afternoon cup
of coffee beside his tractor.
Maybe so. But with crude trading above $130 a barrel, it'll be a long
time before the rigs leave again, and John Bartelson is likely to be a
wealthy man before they do.
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