The Bakken Shale | February 2022
Named after Henry Bakken, the farmer who owned the land where oil was originally discovered, the Bakken Shale is located in North Dakota, Montana, Manitoba, and Saskatchewan. The USGS estimated in 2013 that this basin has an expected ultimate recovery of 7.4 billion barrels. North Dakota Department of Natural Resources put the break-even point at US$46/bbl (2020). The top formations within the region are the Three Forks and the Spanish formations.
State Drilling Statistics
Total Rigs in North Dakota- 33 (+6)
Total Rigs in United States- 650 (+40)
Total U.S. Rigs 62% YTD
Bakken Top Producer
Top Producer By BOE – Burlington (ConocoPhillips)
Natural gas flaring has recently come under scrutiny for being a source of pollution, and rightfully so. ConocoPhillips (COP) has become creative with the ways in which it cleanly disposes of its excess gas, fueling bitcoin mining operations. COP recently opened a bitcoin pilot project in the Bakken through which it sells the gas it would have otherwise flared to bitcoin miners who use it to fuel their computers. Not only does this help COP achieve its climate goal of ending all flaring by 2030 but they are also being paid for what was essentially a waste product.
A large part of North Dakota’s plan to become carbon neutral by 2030 is a $2 billion power plant that will produce clean hydrogen for use in vehicles and electricity production. The plant recently struck a deal to be supplied with natural gas from the Fort Berthold Reservation, operated by the MHA Nation tribe. This deal will prevent flaring excess gas and supply the power plant with the clean hydrocarbon fuel it needs to produce blue hydrogen. The plant is expected to begin operations in 2027 and after a short period of using synfuels, would switch to natural gas provided by the reservation.
More and more North Dakota producers are agreeing that the state’s flat production levels over the past year is a sign of the basins maturing. The director of the North Dakota Oil and Gas Division has also rebranded the Bakken as ‘mature’, and says we can expect production to remain flat for the next decade before it begins to drop. The hydrocarbons left in the basin are becoming increasingly difficult and less economically viable to extract, turning operators away from investing in the basin. The director noted that historically high oil prices, like the ones we see today, spur investment this year, however, he expects modest investment from companies.
Using rig count to determine the general health of an oil producing area is a common metric among analysts. Since the start of the pandemic rig count across the country decreased rapidly and is now again on the rise, this holds true for North Dakota as well which not has a total of 34 rigs. One factor holding operators back from adding more rigs in the state is the lack of laborers. Some operators have tried adding rigs, however, workers either fail to show up at all or quit soon after work has begun. Adding one rig requires around 150 workers, a task that becomes difficult when other operators are fighting from the same pool.
Top Producers By BOE
|Change||Rank||Company||MMBOE Production (1/22)|
|+2||3||WPX Energy (Devon)||2.3|
North Dakota Oil Production
North Dakota Natural Gas
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