Bakken formation reaches 'maturity' according to 2021 North Dakota Energy report
Report says much of the new investments are coming in value-added industries focused on by-product capture from oil and gas production.
DICKINSON — According to the newly released 2021 North Dakota Energy report by EnergyND, Great Plains Energy Corridor and Bismarck State College's North Dakota Polytechnic Institution, industry experts are now saying that the Bakken formation has reached maturity.
Formation maturity is defined in the report as having a majority of operators dedicated to producing their acreage on a consistent and steady pace — but with the added caveat that foreseeable radical growth in production is "less than likely."
The report comes as North Dakota Department of Mineral Resources data shows that the price of crude oil has reached $106.91 a barrel as of May 23. The increase in crude oil barrel prices is a relief to many operators in the formation as the price dropped to untenable lows at $65.46 per barrel in December 2021.
According to the newly released 2021 North Dakota Energy report, private and public sectors have slowly rebounded from the 2020 pandemic and spring 2020 price collapse, but much of the new investments are coming in value-added industries focused on by-product capture from oil and gas production.
North Dakota, previously the second-largest oil producer in the nation, fell to third in oil production behind Texas and New Mexico for the first time since 2012. The oil collapse in mid-2021 witnessed the average rig counts climb slightly to 22 rigs, which was already down in large part due to the slow recovery from the 2020 pandemic and oil price collapse.
The report was positive in many aspects, noting that newer, more advanced rigs operating in the Bakken are able to drill about twice as many wells in a year than those operating in 2012. According to the report, 98% of statewide drilling occurs in the Bakken and Three Forks formations.
A typical Bakken oil well is expected to produce more than 30 years worth of oil, however, favorable economic conditions, enhanced oil recovery efforts and other factors can, and often do, extend the life of a well.
The report further highlighted environmental and reclamation measures taken after a well has stopped producing economically. According to the report, North Dakota state law requires that operators plug a well or return it to production within six months.
Plugging a well involves cementing the production and surface casing at several different depths to ensure no hydrocarbons or saltwater passes to the surface, in addition to cutting off the surface casing about four feet below the ground. Further, any topsoil and subsoil removed during the initial well construction are required to be returned to the site and the land returned to its pre-drilling contours as part of the reclaimed process.
There are two oil refineries in North Dakota, one in Mandan and the one in Dickinson.
Marathon Oil Corporation processes Williston Basin crude oil into gasoline, diesel, jet fuel, heavy fuel oils and liquefied petroleum gas. Marathon purchased its Dickinson Refinery in 2018 from Andeavor. The refinery was the first greenfield diesel refinery to be built in the United States since the late 1970s, and has been online since May 2015.