The Bakken petroleum system, rapidly emerging as the globe’s premier tight oil play, is expected to approach or exceed 1 million barrels in daily production by as soon as the end of the decade, making it a true world-class oil province.
Moreover, if this production scenario unfolds the way many who attended the recent Williston Basin Petroleum Conference hope it will, oil from the Bakken and other unconventional liquids reservoirs would go a long way in reducing U.S. dependence on imports.
“I can envision a world in which the U.S. imports about one-third of the oil it uses,” David Hobbs, chief energy strategist for IHS CERA, said during a meeting with reporters.
Still, the United States “continues to be a major importer even with its enormous energy efficiency success,” Hobbs noted.
North of 1 million barrels
Hobbs believes that by the end of the decade, the Bakken will produce “north” of 1 million barrels per day from current output of around 575,000 bpd, which already makes North Dakota the second largest oil producing state behind Texas.
“In a global context, that makes it a significant producer in its own right,” he added.
In North America, the top 20 tight oil plays, many of which have adopted technology developed in the Bakken, are expected to generate an estimated 3.5-to 5 million bpd over the next decade, Hobbs said.
At the same time, he added, Bakken know-how is being deployed worldwide, to a level that over the next decade could generate 10-to 15 billion barrels of oil per day from tight formations.
“If we take that to a global basis, the speed with which development of tight oil happens will depend in part on how governments encourage that investment,” he said.
Bakken’s big reach
But Hobbs cautioned that what transpires socially and politically in North Dakota’s future regarding the Bakken will have an influence on tight oil development outside the state.
“If the residents of North Dakota turn against tight oil development, that would be very persuasive in other parts of the world,” he added.
“On the one hand, I am incredibly impressed with the extraordinary logistical undertaking going on there. At the same time, I am concerned that the pace of activity could easily exceed what local stakeholders are prepared” to handle.
Hobbs said he doesn’t like to refer to what’s going on in North Dakota as an oil boom, “because it suggests that it’s here today and gone tomorrow.”
Rather, he added, there will be continuing development activity that probably will last at least a decade, or perhaps two decades.
“Even then, once you get beyond that, it’s not that suddenly we’ve switched off the investment tap,” Stark said, “because they will be looking at optimizing investments that could be made. And they are investments that you don’t have to be imagining today.”
Lynn Helms, North Dakota’s director of mineral resources, presented three possible Bakken production scenarios during the Williston Basin Petroleum Conference, May 22-24 in Bismarck, N.D.
Helms’ predictions took into account the following risk factors: changes in the global economy that could drop oil prices; proposed federal tax changes that would affect the oil industry; federal permitting regulations that slow oil development; and the federal Environmental Protection Agency overreaching on hydraulic fracturing regulations.
Outcome possibilities
If all the possible risk factors go wrong, North Dakota’s production would be limited to around 650,000 bpd and hold at that rate for two to three years before declining.
Under a mid-case scenario, Helms predicts North Dakota would hit 800,000 bpd and hold for 10 to 12 years before declining.
And if all goes well in North Dakota’s favor, the state would hit 1 million bpd.
“If everything works out, then we’re going to chase Texas,” Helms said. He noted that North Dakota is expected to level off at 225 rigs by the end of the year, and, if that rig count remains steady, it would take 16 years to drill all the needed wells in the Bakken.
Meanwhile, the North Dakota oil boom already has created thousands of jobs, and Helms said the figure would likely peak at 65,000 new jobs by 2020. Helms, using a multiplier for the number of additional jobs that will be required to support that population, said he could envision the state with 1 million people. The 2011 Census estimate put North Dakota’s population at 683,932.
