Euphoria about the Bakken Formation

Summary:  The euphoria about this is nonsense.  The Bakken Formation was discovered in 1953; production started in 2000.  The USGS report will discuss the recoverable resources, which are important.  But the key questions concern the maximum flows produced and the cost of production — which answer make this just another unconventional source, of marginal significance in the peak oil calculations.

As usual, the internet can make us dumber or smarter — depending on how we use it.

  1. Example of good reporting:  “Report on Bakken oil potential expected“, Business Week (7 April 2008)
  2. Clear statement of the issues from the North Dakota state website: Bakken Formation Reserve Estimates.
  3. The paper that started the discussion:  “Origins and Characteristics of the Basin-Centered Continuous Reservoir Unconventional Oil-Resource Base of the Bakken Source System, Williston Basin”, Leigh Price (1999/2000) — Price estimated the Bakken formation may hold as many as 900 billion barrels of oil. He died in 2000; the study was never peer reviewed or published.   Here is a link to the paper.
  4. Example of nonsense:  “North Dakota Discovery – 200 Bn Bbl of Oil“, Classical Values (April 2008) – “Here is a technique for Mining Oil. I think the peak oil folks got it wrong. As usual. Capitalism beats the fear mongers. Again.”
  5. Update:  The USGS pricked the balloon.  For a retrospective see The Internet makes us dumber: the Bakken euphoria, a case study.

Many unconventional resources have large reserves.  Examples are Venezuela’s heavy oil, Canada’s bitumen (aka “oil sands”), the NW US kerogen (aka “oil shale”), the estimated natural gas and oil in the polar regions, and the Bakken Formation.  The aggregate reserves of these are immense.

From the Business Week article about the Bakken Formation, which expains how this is a unconventional resource:

“The oil is trapped in microscopic pores of rock, and to capture it, most companies “fracture stimulate” horizontal wells by forcing pressurized fluid and sand to break pores in the rock and prop them open to recover oil.”

Unconventional sources differ from conventional petroleum in two ways.  First, their extraction costs — either initial capital outlays or operating costs (or both) — are usually far higher.  Second, their production flows are lower.   Not like the massive flows from the great Texas and Saudi Arabian fields.

For example, by 2020 Canada’s bitumen mining *might* produce 5 million barrels/day — after tens of billions of capital costs, with incalculable costs to Alberta’s environment (much of it will look like the moon).  That assumes sufficient water and natural gas inputs, both of which might be insufficient (nukes have been suggested as alternatives to the nat gas).  But that will not nearly offset the natural depletion of other N. American fields, let alone replace the eventual peaking of the supergiant fields like Cantarell in Mexico or Gwahir in Saudi Arabia.

Another distinction between conventional and unconventional petroleum:  the latter often require far larger inputs of energy for their extraction and refining than conventional sources.  For example:  heavy oil, bitumen, kerogen — all must be mined, heated, and hydrogenated to produce useful products.  The Bakken Formation requires high pressure injections to fracture the rock so that the oil will flow.

These sources are valuable, and will increasingly represent the remaining global oil reserves.  But neither their flows nor costs can be compared to the ample and cheap conventional fields now being sucked dry.  That is the missing element in their euphoric stories.

Please share your comments by posting below (brief and relevant, please), or email me at fabmaximus at hotmail dot com (note the spam-protected spelling). 

Click here to see other articles about Peak Oil on this site.

Posts about the Internet: does it make us smarter or dumber?

  1. Cable Cut Fever grips the conspiracy-hungry fringes of the web, 7 February 2008
  2. Resolution of the Great Submarine Cable Crisis — and some lessons learned, 8 February 2008
  3. What do blogs do for America?, 26 February 2008
  4. The oddity of reports about the Iraq War, 13 March 2008
  5. Euphoria about the Bakken Formation, 10 April 2008
  6. The Internet makes us dumber: the Bakken euphoria, a case study, 15 April 2008
  7. Does reading Debkafile make us smarter, or dumber? , 15 June 2008
  8. A Congressman ignites a netstorm about Twitter, 9 July 2008

Posts about rumors of a US armada sailing to blocade Iran

  1. More rumors of war: our naval armada has sailed to Iran!, 9 August 2008 — Tracing the origin of these rumors.
  2. Update on the rumored armada sailing to Iran, 13 August 2008 — With updates from Stratfor and Debkafile.
  3. A US naval armada is en route to blockade Iran and start WWIII (the story gets better every day), 14 August 2008 — More details from one of the bloggers who shot this story into cyberspace, and an official US denial.
  4. UPI reports on the multi-national armada sailing to Iran, 15 August 2008
  5. Stop the presses: no naval armada has sailed to blockade Iran!, 20 August 2008

11 thoughts on “Euphoria about the Bakken Formation

  1. Cantarel peaked last year. No eventuallity there. Happened.
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    Fabius Maximus replies: And US lower 48 extraction peaked aprox 1971. This is not trvia pursuit, and these factoids tells us little. Oil fields hold finite amounts of oil, so extraction must certainly peak. Nobody, except a few on the fringe (e.g., Gold’s “hot oil” theory) doubt this. The question is when?

  2. I once worked on the design of an oven for extracting oil from shale. The cylinder was about 16 feet in diameter and over 100 feet long. There was to be a large gas fired oven in surrounding the cylinder, heating the shale inside. There was to be 10 of them. They would have processed hundreds of tons of shale in a day. Of course, oil extraction would not have been 100%. Also, there would be the problem of what to do with all those tailings. The project never flew due to environmental concerns. Nowadays, an additional problem would be the natural gas. Where would it come from? This is also a problem for the Canada tar sands.

  3. Fabius Maximus replies: This commend has been deleted. No discussions of investments are allowed on this site. As it says on the masthead, the subject is geopoltiics. There are thousands of other sites on which to discuss your money.

  4. Great thread FM. When you examine the numbers these ‘saving the past’ options don’t add up. We (the World) will have to change. But, as I’ve pointed out in other posts, there are tremendous gains to be made.

    Change can be positive or negative, the difference between the 2 options is if we plan and manage change towards a desired and achievable goal (you’re trying to turn me into an optimist about the longer term damn you, but I’ll somehow find some more doom and gloom yet – though the short term is stuffed).

    I should amplify this a bit, more as an education thing, I am noticing a change recently. I am an analyst, that my thing. I enjoy it, I’m very good at it, but .. there is also a but .. I am incurably honest and blunt. So you can imagine the enemies I have made.

    To date I have been fired 4 times (got out twice before the inevitable happened), had a Govt organisation actually ringing up my clients telling them I was ‘rubbish’ (a very senior manager no less, that equalled a year of unemployment that nearly cost me my house, but my wonderful wife believes in me and supported me).

    I get by and have a reasonable living standard (I’ve never been motivated towards money), not rich by any means, but struggling middle-middle class (with a mortgage), I have have a lot of fun though…

    But recently things have been changing. I have a new, very well paying, full time job, I have long term private consulting and now I have a significant contract with a major organisation. Means not a lot of sleep, which at my age is an issue – oh I remember the all nighters I used to be able to pull, but I’m picking up a few hints that people are staring to listen. I talked to some senior executives, in my blunt way, about what could be done (based on what I’ve being doing for years) and they actually listened and even got excited, instead of, even a few years ago, of turning away and mumbling ‘what a whacker he is’.

    The saddest thing is that I have no young people to work with and train, no one studies physics/math/statistics etc now (frustrated teacher coming out). I love teaching and training people

    So there is hope, but it is going to take time, we all do our best and we must always do our best.

    And FM is doing his best, and I thank (and more importantly respect) him.

  5. Google “oil wells refilling”. Peak Oil is as much of a myth as Global Warming. Religions for the gullible.
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    Fabius Maximus: There are simple explanations for “oil wells refilling” that do not require abiotic (aka “hot oil”) origens for oil. Stating this as clear proof is “crank science” or pseudoscience in pure form.
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    For more on this I recommend “Science, Pseudoscience, and Irrationalism” by Steven Dutch or “SCIENCE AND PSEUDOSCIENCE: CRITERIA OF DEMARCATION” by Charles J. List.

  6. How much oil are we talking about? Next Energy News says 200 billion bbl. The USGS says it’s more like 3.65 billion bbl.

    Who is right? Both, it seems–it’s a matter of how much is recoverable. In a conventional oil well, about 20% of what’s actually there actually gets pumped out. In the Bakken foundation, which requires horizontal drilling through rock as hard as concrete, recovery with current technology will be in the range of two percent. “Oil Industry Excited Bakken Formation Prospects“, KFYR TV (11 April 2008).

    So, let’s say, we drill like crazy and extract everything available in the Bakken foundation in one single year–all 3.65 billion bbl. The US consumes about 7.6 billion barrels each year. This means the Bakken foundation could supply the US for almost half a year.

    If you could make horizontal drilling as a conventional well, you can multiply this by about ten. (I.e., 20 percent is recovered, rather than 2 percent). That would then supply the US for five years, instead of about half a year.

    This is not cause for euphoria. It’s actually disappointing to learn that conventional wells leave 80 percent of the oil in the ground, and that drilling in Bakken will leave 98 percent in the ground. It will be cause for euphoria when someone develops extraction technology that works better than this. There’s obviously a lot of room for improvement.
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    Fabius Maximus replies: I try to delete as few comments as possible, but this is on the borderline. Both the Next Energy News and the USGS estimates were of “undiscovered, technically recoverable
    oil and associated gas resources”. The USGS knows about horizonal drilling, as this technology has been in use since the 1970’s — growing more sophisticated over time. This is factored into their estimates, and they cannot be multiplied by 10x.
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    The comparison of unconventional reserves to current consumption is irrelevant. Unconventional resources like Bakken are typically low-flow compared to conventional fields. The extreme case of this are the vast depostis in Alberta’s bitumen (aka “oil sands”), Venezula’s heavy oil, and the US kerogen (aka “shale oil”). All of these are extracted by processes closer to mining than pumping, and hence have very low flows (and high capital requirements).

  7. 1. Oldskeptic:”no one studies physics/math/statistics etc now”

    White European-descended people have mostly abandoned it, because they know if they get a degree in it, they will be exploited for five years and then dumped in the gutter.
    On the other hand, plenty of Asians are still studying math, including Indians and Chinese.

    No, wait, there are a few white Euros studying science. The Russian Business Network is doing research on how to extort money from people over the Internet. That’s applied science.

    2. Greg Lehmann: “I once worked on the design of an oven for extracting oil from shale.”

    This kind of project still has some promise, although perhaps more for raw materials than for energy. I get most of my optimism from Next energy News. Renewable energy can be used to optimize output from low-quality sources like tar sands.

    3. Fabius, the line between science and pseudo-science is an obsession of mine, and I take serious issue with your choice of Prof. Dutch as a philosopher of science. The List article from Mises.org looks to be higher-quality, though. Your site is a geopolitics site, but if you also hang out at any philosophy-of-science sites, you and I ought to schedule a debate.
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    Fabius Maximus: Some comments…

    1. Great reply, and the comparison with Asia is on target and disturbing. My article “Myths about Peak Oil: There are not enough petro-engineers!” illustrates your point with reference to petroeum engineers.

    2. Next Energy News is fun to read but, as we see in the euphoria of the Bakken Formation, not always reliable. Note my follow-up article on this traces the euphoria back to one of their stories. Renewable energy is today and for many years an expensive input to for low-energy-yield (energy return on investment”) sources like kerogen mining. Possible in the future, but not in reasonable timeframe for current planning.

    3. I did not characterize Steven Dutch in any way. let alone do an “appeal to authority”. I said his article was a nice introduction to the subject. Which it is imo, even if written by Donald Duck. “The article is not the author, the name is not the object, etc.” The subject gets very deep quickly, but ignoring the complexities is appropriate for a brief read.

  8. 1. Well, it appears there is not much to the concern about “Peak Oil.” Price of crude is plummeting — now well below $70 and heading lower. Plenty of oil.

    2. Coldest year on record since records have been kept? Thank goodness Congress got “Global Warming” turner around. We need to send letters of thanks to Congress for turning this around.

    3. I assume alternative energy will now struggle that oil is retreating to historical prices. SUVs and pick-up trucks should sell well at the end of the close-out season on 2008 models. Happy days are here again.

    4. Let’s see: no global/national implications for the Bakken. Price of crude oil nears $150/barrel; then the Bakken oil production comes on line, and price of oil plummets to below $70. Sounds like “drill, drill, drill” and the discovery of the Bakken was just what “we” needed.
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    Fabius Maximus replies: This is just silly, a collection of logical errors.

    (1) Short-term demand changes can move commodity prices by large amounts. This says nothing about the long-term availability of oil.

    (2) One cold period in a small region of the earth (to what are you referring, by the way) say nothing about global weather — and even less about global climate trends.

    (4) I love these casual comparisons, as if numbers had never been invented. You might as well attribute oil price movements to changes in skirt lengths. You make no effort to relate Bakken production to world usage. In any case, your impliation that global oil production has increased significantly is false. Even liquid fuel production, including the increased production of biofuels, is flattish since 2005 — esp vs. the large increase in global GDP.

  9. I’ve lost track: is Fabius a proponent / opponent of “Peak Oil.” I used to believe in theory of “Peak Oil.” I was taken in by that in the 1970’s when I started riding the bus to graduate school. It is now clear that if there is such a thing as “peak oil” it won’t occur in my lifetime or that of my children, or perhaps even in the lifetime of my grandchildren. Oil is now well below $70 and falling and OPEC will have to curtail production to get price back up.

    Oh, yes, plenty of oil — put on “Stayin’ Alive” in the background and just tap out “peak oil” is dead — at least in our lifetimes.
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    Fabius Maximus replies: My postition is quite clear and has not changed. It is coming (I know of no experts who disagree). The public data is insufficient to determine when, hence the range of forecasts from now through 20 years plus. Also complicating the calculation: global GDP over the next 20 years might increase 22% (1% annual) or 165% (5% annual).

    As for your forecast, are you speaking ex cathedra? Using your psychic powers? Or just making stuff up, as in your previous comments?

    Most important: I suggest that you subscribe to a newspaper, or start reading Yahoo News. Oil prices are falling due to a decline in demand as the world slides into a recession (US GDP was negative in the 4th quarter of 2007, and things have gotten much worse since then). How can you write about oil and not know this?

  10. The euphoria continues: Three of North Dakota’s largest cities had construction booms that led their commercial sectors: Jamestown, up 114 percent; Williston, up 159 percent, and Dickinson, 48 percent, slightly below its 59 percent hike in manufacturing sales. …

    Since this posting will be censored it will be posted elsewhere.
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    Fabius Maximus replies: More spam. I blocked this person (the only one on my blocked list) as his comments — his frequent comments — were either trivia about North Dakota (irrelevant to this site) or promotational. This one is both. I find it amazing that people spend time posting this stuff. Fortunately we have spam filters.

  11. This will be censored by the webmaster. For those who might see it, look at all the oil sloshing around: third graph down on “This Week In Petroleum“, 26 November 2008.

    This is the most crude oil we’ve had in two years. So much for peak oil theory.
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    Fabius Maximus replies: Another astonishing example of how people write without bothering to actually learn the basics about the topic. The current surplus results from a collapse in demand, as is evident from the very same report Oksol cites. For example US gasoline demand is down almost 6% year over year (source) — 512 thousand b/day. The EIA revisions to September demand were shocking — YoY demand down almost 13%.

    Multiply this throughout the world, it adds up to serious numbers. It’s called the business cycle.

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