Billions of Barrels in the Bakken

The North Dakota Department of Mineral Resources (DMR) keeps track of oil production in the Bakken oil patch of western North Dakota. The first month of recorded well production was December 1953. Between 1953 and 1982, the highest number of oil wells in production at any one time was 38.

In the early 1980s, the price of oil per barrel spiked to nearly $40/barrel, which adjusting for inflation is more like $100/barrel today. This represented nearly a 3-4 times increase over what oil had cost a decade before. The higher cost of oil justified more expensive means to extract it. The sleepy oil fields of North Dakota, with their more challenging to find reserves, began to seem more attractive and the oil boom of the 1980s was born.

By December of 1989, the DMR reported 131 wells in operation. The anticipated expansion wasn’t quite as large as some had hoped, because oil prices tumbled from their peak highs shortly after the spike. By 1989, oil prices were $24/barrel. Promising new technology, like horizontal drilling, fueled further expansion into the early 1990s. By 1991, there were 229 wells in operation, but one critical problem was looming: productivity. The wells in the 1980s produced 30-40 barrels a day, and the wells drilled in the early 1990s peaked at 60 barrels a day. But then suddenly, productivity sank. By the end of the 1990s, productivity dropped to 10 barrels a day per well. The boom had gone bust.

Around that same time, Leigh Price, a researcher from the USGS, had started to compile information in the 1990s about oil in the Bakken formation, estimating it could hold between 271 billion to 503 billion barrels of oil. Price suggested that potentially 50% of this oil could be recoverable. Despite this, the Bakken had not been developed as a major energy producer until hydraulic fracturing technology (fracking) finally proved to be the missing link to the recovering of the oil.

With the existing technology and proven resources, the USGS officially estimates recoverable barrels to be 7.4 billion; only 1.5%-2.7% of the estimated total reserves. Even though the total recoverable amount seems a small overall percentage, the billions of recoverable barrels have still led to the fracking induced boom we see today. For North Dakota in 2005, there were only 220 oil wells in production. As of May 2014, there are now 7,687 wells in production; which is 35 times as many wells! In the same period, production per well went from roughly 15 barrels per day to 127 barrels per day.

North Dakota is now the only state, other than Texas, which produces more than 1 million barrels of oil per day. At a rate of 1 million barrels per day, the Bakken’s 7.4 billion barrels could be exhausted in a little over 20 years. Analysts believe Bakken production will top out at 2 million barrels per day. At that rate, 7.4 billion barrels would be exhausted in roughly 10 years. Of course, production isn’t uniform, and there is no accounting for advances in technology or additional oil exploration. Technology and exploration may yield more recoverable oil yet.

No matter if advances in technology or exploration are realized, the next 5-10 years looks to be a relatively strong certainty for continued oil production in the Bakken formation.