USGS: 7.4B barrels of oil possible in ND, Mont.

[May 01, 2013]  BISMARCK, N.D. (AP) -- Government data released Tuesday show that 7.4 billion barrels of oil could be recovered from two massive shale formations spanning parts of the Dakotas and Montana, nearly double the amount previously estimated for the region.

The new number from the U.S. Geological Survey is based on data largely from oil company and state drilling records. But unlike the agency's 2008 estimate, it includes more than 3 billion barrels of oil believed held in the Three Forks formation, which is directly below the oil-rich Bakken formation.

Large-scale drilling in Three Forks didn't occur until after that earlier assessment, and the formation is now estimated to hold as much recoverable crude as the Bakken, according to the USGS. The agency calls the formations the largest continuous oil accumulation it has ever assessed -- and some industry insiders think its potential is even stronger.

"It's a great number but it's conservative," said Ron Ness, president of the North Dakota Petroleum Council, which represents more than 400 companies working in western North Dakota's booming oil patch.

The Bakken, where oil-producing rock is sandwiched between layers of shale nearly two miles underground, encompasses some 25,000 square miles. About two thirds of it under western North Dakota, with the rest extending into eastern Montana and parts of Canada. It doesn't extend into South Dakota, though the Three Forks does.

Oilmen have known for years that Three Forks held a vast cache of crude, but technology and oil prices haven't made it economical until recently, Ness said. Brenda Pierce, USGS energy resources program coordinator, called the Three Forks formation "up and coming," saying its potential has largely been unknown until recently.

North Dakota politicians had asked the USGS to do the new assessment to add the Three Forks, saying it would attract more money to build infrastructure in the state's oil patch.

"The whole purpose was to get more private investment in western North Dakota -- more houses, hotels and businesses," said U.S. Sen. John Hoeven. The North Dakota Republican also said the assessment would help lead to less dependence on foreign oil.

"This is good news for our state and our country," Hoeven said.

The new assessment estimated that 5.8 billion barrels could be recovered in North Dakota and 1.6 billion barrels in Montana. Estimated South Dakota production was near non-existent, according to the study.

Geologists and oil companies have mixed opinions whether the Three Forks is a separate oil-producing formation or if it acts as a trap, catching oil that leaks from the Bakken shale above. Some have said it could be a combination of both.

To capture crude from the formations, companies drill down nearly two miles then angle the well sideways for about another two to three miles. A pressurized concoction of water, chemicals and sand is injected to break open oil-bearing rock, which allows the oil to flow to the well.

That technique, known has hydraulic fracturing or fracking, has elevated North Dakota from the ninth biggest oil-producing state just six years ago to second, trailing only Texas.

In some states, it's been blamed for endangering water quality. North Dakota regulators say the state's water sources are protected by thousands of feet of geologic formations atop fracturing operations.

[Associated Press; By JAMES MacPHERSON]

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