A shale formation stretching North Dakota and Montana may have an estimated 3 to 4.3 billion barrels of technically recoverable oil, according to a U.S. Geological Survey assessment.
Known as the Bakken Formation, the find would make the recoverable oil in North Dakota and Montana the largest U.S. oil reserves outside Alaska.
Map of Bakken Formation in northern United States, courtesy Grand Forks Herald
The recently released assessment shows a 2,800 percent, or 28-times increase in the amount of oil recoverable from the Bakken Formation, compared to the agency’s 1995 estimate of 151 million barrels of oil.
According to the USGS, the dramatically increased estimate of recoverable oil in the Bakken Formation results from new geological models, advances in drilling and production technologies, and recent oil discoveries.
By the end of 2007, approximately 105 million barrels of oil had been produced from the Bakken Formation.
“The Bakken Formation estimate is larger than all other current USGS oil assessments of the lower 48 states and is the largest ‘continuous’ oil accumulation ever assessed by the USGS,” said a news release making the announcement.
The Bakken Formation lies in “Williston Basin,” a geological formation in the north central U.S., underlying much of North Dakota, eastern Montana, northwestern South Dakota, and southern Saskatchewan and Manitoba, Canada, according to the Energy Information Administration of the U.S. Department of Energy.
The EIA says the success of horizontal drilling and fracturing efforts in Montana is the reason a decision was made to re-evaluate the 1995 USGS Assessment of Resources that had estimated only 151 million barrels were technically recoverable from the Bakken Formation.
Lynn Helms, director of the oil and gas division of North Dakota’s Industrial Commission told the Grand Forks Herald the USGS announcement had prompted new interest from investment bankers and the oil industry.
“We have had contacts from Scotland and Australia today,” Helms told the newspaper. “And of course, lots of Canadian interest, and contacts from across the United States, both from the media and the oil industry. And banks. I think they are looking for a place to invest venture capital.”
The USGS announcement should give “a significant boost to North Dakota’s already-booming oil industry,” according to a news release from the office of North Dakota’s Democratic Sen. Byron Dorgan.
“The oil industry in North Dakota has already seen substantial growth,” Dorgan said, “but this report is important, because it gives oil companies another set of eyes.”
“The Bakken Shale should attract significant new investment to this region,” he continued. “This is an exciting time for North Dakota’s oil industry. We’re going to see new growth that will boost our economy and help our country shed its dependence on foreign oil.”
The USGS report increasing the estimate of oil recoverable from the Bakken Formation supports the arguments of Shell Oil’s president of U.S. operations, John Hofmeister, who has recently questioned the validity of the assumptions behind “peak oil.”
As WND reported last month, Hofmeister told CNBC’s national Squawk Box morning show audience that peak oil theorists, such as Matt Simmons, have dramatically underestimated the amount of non-conventional oil economically recoverable with oil prices hovering at $100 a barrel.
WND also reported that Simmons, a Houston-based oil industry investment banker, also appeared on CNBC’s Squawk Box show to defend his peak oil position, arguing that diminishing oil flow is an irreversible worldwide “grim reality,” regardless what new oil resources are discovered.
Peak oil theorists maintain that oil is a finite resource and analysis of depleting oil fields demonstrates the world has either already reached or is nearing maximum oil flow.
Non-conventional oil reserves include a variety of oil reserves, including the oil tars in Alberta, Canada, which present technology allows to be converted economically into oil through well understood synthetic chemical processes.