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Oil projected to surpass records

Southwest North Dakota is on track for increased oil activity after one official discussed projections at the North Dakota Oil and Gas Producing Counties Association's annual meeting at the Ramada Grand Dakota Lodge in Dickinson Thursday morning.

Helms
Press Photo by Lisa Anne Call Lynn Helms, director the North Dakota's Department of Mineral Resources addresses the audience the North Dakota Association of Oil and Gas Producing Counties annual meeting at the Ramada Grand Dakota Lodge in Dickinson Thursday morning.

Southwest North Dakota is on track for increased oil activity after one official discussed projections at the North Dakota Oil and Gas Producing Counties Association's annual meeting at the Ramada Grand Dakota Lodge in Dickinson Thursday morning.

State, school, city and county officials from 17 oil and gas producing counties met and received updates on roads, housing and just what the state will see in future oil activity.

"We are seeing unsurpassed activity in the oil and gas business," said Lynn Helms, director of the state's Department of Mineral Resources.

North Dakota has produced about 5,000 wells, the highest in its history, Helms said.

Stark County and surrounding areas could see an awakening of oil activity.

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Helms said about six wells are permitted and drilling in and around Dickinson, citing it as a "renaissance in the Lodgepole" Formation.

From Dickinson to Belfield, operators were able to produce a large amount of oil from conventional, old-fashioned, vertical wells in the Tyler Formation.

"What we're just beginning to recognize is that the entire Tyler package is another unconventional play like the Bakken," Helms said. "It contains several really hot shale beds and when you get a high gamma ray signature in those shale beds, it means there's lots of organic material in there."

The Tyler Formation encompasses virtually all of western and southwestern North Dakota and extends past the South Dakota border, Helms said.

"It's got all the marks of an unconventional resource play," Helms said. "Will they unlock the secret right away? No, but we better figure out how to build roads and deliver water to southwestern North Dakota."

Slope County has a lot of potential in the Tyler Formation, Helms said.

Activity in the Killdeer area is ongoing, with about 15 to 30 rigs running for the next five to seven years, Helms said.

Initial production rates in Dunn County have doubled from a year ago, Helms said, adding the Three Forks Formation in Dunn County is in the testing stages.

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"I thought we were kind of stabilizing so I've got a much higher projection for Dunn County than I did a year ago ... a much higher curve and moving much more quickly than I had (projected) a year ago," Helms said.

While still expecting the same end result in 2015, things haven't kicked in quite as much as anticipated from last year in Billings County, Helms said.

"Belfield is just kicking off, but we're expecting to build to a five-rig program down here and run five rigs for 10 years," Helms said.

Improved technologies are helping draw out the black gold.

McKenzie County is the highest in its history, Helms said.

"They're drilling about the same number of wells, but again, the production rates are double," he said.

Helms said officials estimate about 2,000 wells per year will be drilled in the Bakken and Three Forks formations, consuming 23 million gallons of water per day, continuing for close to 20 years.

Industrial Commission seeing record numbers

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"We are going to well surpass any previous records that we've had in oil well permitting," Helms said.

This year, the state is on track in permitting close to 1,400 wells, Helms said. During a peak in 1981, about 1,150 wells were permitted, bringing the rig count up to 148, lasting for about two weeks.

Only about two-thirds of those wells were drilled, Helms said.

This year, about 90 percent of permitted wells are expected to be drilled in the first year or with a permit renewal, Helms said.

"We're seeing the drilling rig count approach those old records and then infrastructure restraints begin to kick in," Helms said. "There's not enough trucks to move rigs, there's not enough dirt moving companies, there's not enough housing for crews out there and so we see a lot of natural barriers that are kind of holding that drilling rig count."

Plenty of prospective drilling space and opportunities are available and projections indicate the state will have 165 rigs or more by this time next year, Helms said.

"We're going to have to strap our boots on and prepare to deal with it," Helms said.

The amount of hearings and cases the state's Industrial Commission has needed to review has been "over the top."

"We are about 322 cases behind on writing orders and so we have had to go to the emergency commission and get some additional help," Helms said. "Never before in our history have we even tried to hear or decide 2,000 plus cases in front of the Industrial Commission."

Transportation budget at record high

Shane Goettle, commissioner of the state Department of Commerce, said about $168 million will be delivered to counties and political subdivisions in the present biennium.

Goettle said the state's transportation budget is at a record high -- $1.35 billion and for the 2010-2011 construction season, $237 million is being spent in oil and gas producing counties.

Several road improvement and rehabilitation efforts are underway.

Highway 22 is receiving $14 million in work, Highway 85 is receiving $75 million, Highway 12 is receiving $34 million and Highway 23, $16.5 million, Goettle said.

Officials have been working to define and outline just what the increased traffic is doing to area roads.

Alan Dybing, of the Upper Great Plains Transportation Institute, an entity conducting a massive road impact study, said the study's draft report will be released Nov. 15, with the final report slated for release Dec. 1, in time for the Legislative session.

Housing constraints are still plaguing oil-driven areas and Goettle said while developers feel comfortable heading into areas where "there's underlying economies apart from oil," other locations are a bit more difficult.

"There's some whose risk tolerances aren't quite as high to move them north and west into the region," Goettle said.

Developers are needing "good solid information to assess what the demands will be" and what community constraints exist.

"To move the market, we simply need good information which is there anecdotally, its there in the experiences that we all have seen, but to quantify it is a real challenge and they're asking us, 'What's the demand?' And that's something we're trying to get our arms around," Goettle said.

Related Topics: DICKINSON
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