More oil from Bakken, 30th Jan 2011The competition between the...

More oil from Bakken, 30th Jan 2011

The competition between the two is further proof that technology can squeeze more production from the Bakken rocks in a region once thought to have passed its best-before-date, but now yielding 350,000 bpd and expected to reach 500,000 bpd by 2020.

Williams Cos. has just paid US$925 million to acquire 85,000 acres of Bakken land and expects to spend US$360 million on drilling and development by the end of this year, adding to its 185 million barrels of oil equivalent of net reserve potential.

Marathon is targeting 22,000 boe per day of production over the next three years, up from its current 14,000 boe per day.

In Saskatchewan, Cenovus Energy, Crescent Point Energy, Enerplus Resources and PetroBakken are the dominant players in the Bakken, where output is close to 70,000 bpd, but foreign entities are edging into the picture, with Abu Dhabis Taqa North adding the Bakken to its varied Canadian portfolio and Australias Molopo Energy using the Bakken as a springboard towards its goal of acquiring 9.2 million barrels of reserves.

Resource could be 9 billion barrels

The U.S. Energy Information Administration recently estimated North Dakotas shale oil formation has posted an 83 percent increase in its proved reserves over the past year to 480 million barrels.

The U.S. Geological Survey estimates the Bakken formation could hold as much as 4.3 billion barrels of recoverable oil, using new horizontal drilling and multi-stage fracturing technologies, although others believe the total could be 9 billion barrels once the emerging Three Forks-Sanish reservoir is included.

Further fueling interest, Calgary-based NuLoch Resources has agreed to an all-share takeover bid by Texas-based Magnum Hunter Resources valued at US$327 million, creating NGAS Resources, a cross-border player in the Williston basin, which covers portions of Saskatchewan, Montana, North Dakota and South Dakota and takes in the Bakken and Three Forks-Sanish plays.

Magnum Hunter, which started trading on the New York Stock Exchange 18 months ago, has focused exclusively on unconventional shale oil and gas in North Dakota, the Appalachians and Texas, currently producing 1,800 bpd, while NuLoch was formed from a spinoff in 2005 and produces 1,550 bpd from 72,000 acres straddling the Canada-U.S. border.

Victor Rodberg, an analyst with Clarus Securities, said the deal points to growing interest by Canadian and U.S. companies in prospects on both sides of the border. He wondered why companies such as Crescent Point or PetroBakken hadnt already made a bid for NuLoch. - Gary Park

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