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It was last month when AP reported that the Bakken shale oil fields have produced their billionth barrel of oil.
The drillers first targeted the Bakken in Montana in 2000 and moved into North Dakota about five years later using advanced horizontal drilling and hydraulic fracturing techniques to recover oil trapped in a layer of dense rock nearly two miles beneath the surface.
To date, North Dakota has generated 852 million barrels of Bakken crude, and Montana has produced about 151 million barrels through the first quarter of 2014. They're going like gangbusters... According to AP, Oklahoma City-based Continental Resources Inc., one the oldest and biggest operators in the Bakken, said two-thirds of the production has come in the past three years.
Here's where it gets a little fuzzy. Continental Chairman Harold Hamm said production is “…right in line with expectations" and he estimated the Bakken holds more than 20 billion barrels of oil and technology continues to improve to help recover it.
The U.S. Geological Survey says up to 7.4 billion barrels of oil could be recovered from the Bakken and the underlying Three Forks using current technology.
And yet, just days later another exec from Continental Resources, President Rick Bott told the IHS CERA Week energy summit in Houston that the Bakken holds nearly 900 billion barrel potential and even at the current 3.5% recovery rate, the industry can extract 32 billion barrels of oil.
How’d he arrive at 900 billion barrels? I figured there’s no harm in asking. And the folks at Continental Resources replied. They sent me a ‘white paper’ from 2011 that said the Bakken “could potentially contain recoverable reserves of up to 24 billion barrels of oil equivalent.”
But, the document had no author. Nobody put their name on it and it offered no quotes attributed to anyone. And still, we’re looking at a projection the chairman stands by that falls a bit shy of his president’s estimate by 876 billion barrels.
Can anybody explain this? 7.4 billion? 24 billion? 32 billion? How about 900 billion barrels?
The folks at Continental said they’re ‘comfortable and confident’ in their data. Never mind that the data doesn’t support what their president just announced to the oil industry and the media covering it.
The good news, apparently, is that no matter how much oil emerges from the Bakken, there’s huge demand for it. By 2025, demand for that U.S. oil could grow around the world by 15- to 20 percent. That’s what Valero’s Chairman and CEO Bill Kiesse said when he spoke at the same conference in Houston.