Tight Oil
Tight Oil Resources in North America – An Emerging and Evolving Opportunity Center for Strategic and International Studies (CSIS) Tight Oil Panel Discussion December 7, 2011 Washington, D.C. James A. Sorensen Energy & Environmental Research Center Grand Forks, North Dakota
© 2011 University of North Dakota Energy & Environmental Research Center.
Pre-Bakken North Dakota Traffic Jam
Bakken Boom Traffic
What Is Tight Oil? • “Tight” refers to the extremely low permeability of the reservoir rock, which impedes the ability of the oil in the formation to flow freely.
• Tight oil is found in rock formations associated with organically rich shale at unminable depths. • Some produce directly from shales, but much tight oil production is from low-permeability siltstones, sandstones, and carbonates that are closely associated with oil-rich shale. Core from Bakken Middle Member
Tight Oil – Production Technologies • Recent advancements in technology have spurred tight oil production. – Horizontal drilling and completion • 5000- to 10,000-ft laterals in the Bakken – Hydraulic fracturing • “Fracking” with a mixture of fluids and proppants EERC . . . The International Center for Applied Energy Technology
Hydraulic Fracturing (a.k.a. “Fracking”) •
A mixture of water, chemicals (typically polymers), and proppants is pumped at high pressure into the reservoir rock formation, forcing fractures to open along the wellbore.
•
Fracking water requirements range from 1 to 5 million gallons of freshwater per well.
•
A percentage of the frack water returns to the surface, in a controlled manner, through the casing and is recovered and disposed of or recycled.
•
Proppants in the frack fluid become stuck in the fractures that were created in the reservoir formation, “propping” them open.
•
The reservoir rock is now more permeable, and oil can flow more freely into the wellbore.
Where Is the Bakken? The Bakken Formation is a rock unit occurring deep in the Williston Basin. Discovered in the 1950s in North Dakota. Prolific, sustained production began in the 2000s. Oil is currently produced from the Bakken Formation in:
• • • •
North Dakota Montana Saskatchewan Manitoba
“How Many Bakkens Are There?”
Magnitude of Recoverable Tight Oil Resources
4000 MMbo
Data on recoverable tight oil resources are not yet available for many states.
Tight Oil – Projections 2012 Williston Basin tight oil production will be over 500,000 bpd. Eagle Ford will be over 100,000 bpd. 2020 North American tight oil production could be over 2,000,000 bpd. 2050 North American tight oil production could still be over 2,000,000 bpd. EERC . . . The International Center for Applied Energy Technology
How Much Bigger Can Bakken Get? Currently only 1%–2% recovery factor. Enhanced oil recovery technologies may improve ultimate recovery. Can CO2 be a game changer in the Bakken?
Tight Oil – Challenges Environmental Issues – Multiple-stage fracking can require millions of gallons of water. – The frack fluids may contain chemicals that have become the subject of public concern. – Flaring has been a source of environmental criticism.
Tight Oil – Solutions Environmental Issues – Development and application of frack fluid recycling.
– Reformulation of frack fluids to be more environmentally friendly. – Utilization of flare gas. • Infrastructure is catching up. • On-site and off-site uses for gas are developing.
Tight Oil – Challenges Public Perception Issues • The construction of thousands of well pads and truck traffic for the drilling and fracking of thousands of wells: – Wear and tear on roads and highways
– Traffic jams in rural communities
– Increased airborne dust – Adversely affect the “viewshed”
Tight Oil – Solutions • Increased use of technologies to drill multiple wells from a single pad: – Reduces the overall footprint of drilling operations.
• Construction of truck routes around communities. • Development and application of environmentally friendly dust control materials.
Tight Oil – Economic Projections North Dakota Example By 2012 1450 to 2940 wells/year, with 2140 being expected. • 100 to 165 rigs • This equates to 12,000 to 19,800 jobs 10- to 20-year life span for the Bakken play • 21,250 new wells • This equates to 3000 to 3500 long-term jobs Source: Mr. Lynn Helms, Director of the North Dakota Department of Mineral Resources, from a public presentation given in Williston, ND, on 8/3/2010. www.dmr.nd.gov/oilgas/presentations/ActivityandProjectionsWilliston2010-0803.pdf
Tight Oil – Economic Impact North Dakota Bakken Example A single well over its lifetime is projected to: Produce more than 575,000 barrels of oil. Generate over $20 million net profit. Pay approximately $4,250,000 in taxes.
Pay royalties of $6,900,000 to mineral owners. Pay salaries and wages of $1,550,000. Pay operating expenses of $1,900,000. Source: Mr. Lynn Helms, Director of the North Dakota Department of Mineral Resources, from a public presentation given in Minot, ND, on 9/1/2011. www.dmr.nd.gov/oilgas/presentations/MinotCOC2011-09-01.pdf
National Petroleum Council Report Prudent Development – Realizing the Potential of North America's Abundant Natural Gas and Oil Resources
Final Report Approved September 15, 2011 Web site where report can be downloaded: www.npc.org
Contact Information Energy & Environmental Research Center University of North Dakota 15 North 23rd Street, Stop 9018 Grand Forks, North Dakota 58202-9018 World Wide Web: www.undeerc.org Telephone No. (701) 777-5287 Fax No. (701) 777-5181 James A. Sorensen, Senior Research Manager [email protected]
© 2011 University of North Dakota Energy & Environmental Research Center.
Pre-Bakken North Dakota Traffic Jam
Bakken Boom Traffic
What Is Tight Oil? • “Tight” refers to the extremely low permeability of the reservoir rock, which impedes the ability of the oil in the formation to flow freely.
• Tight oil is found in rock formations associated with organically rich shale at unminable depths. • Some produce directly from shales, but much tight oil production is from low-permeability siltstones, sandstones, and carbonates that are closely associated with oil-rich shale. Core from Bakken Middle Member
Tight Oil – Production Technologies • Recent advancements in technology have spurred tight oil production. – Horizontal drilling and completion • 5000- to 10,000-ft laterals in the Bakken – Hydraulic fracturing • “Fracking” with a mixture of fluids and proppants EERC . . . The International Center for Applied Energy Technology
Hydraulic Fracturing (a.k.a. “Fracking”) •
A mixture of water, chemicals (typically polymers), and proppants is pumped at high pressure into the reservoir rock formation, forcing fractures to open along the wellbore.
•
Fracking water requirements range from 1 to 5 million gallons of freshwater per well.
•
A percentage of the frack water returns to the surface, in a controlled manner, through the casing and is recovered and disposed of or recycled.
•
Proppants in the frack fluid become stuck in the fractures that were created in the reservoir formation, “propping” them open.
•
The reservoir rock is now more permeable, and oil can flow more freely into the wellbore.
Where Is the Bakken? The Bakken Formation is a rock unit occurring deep in the Williston Basin. Discovered in the 1950s in North Dakota. Prolific, sustained production began in the 2000s. Oil is currently produced from the Bakken Formation in:
• • • •
North Dakota Montana Saskatchewan Manitoba
“How Many Bakkens Are There?”
Magnitude of Recoverable Tight Oil Resources
4000 MMbo
Data on recoverable tight oil resources are not yet available for many states.
Tight Oil – Projections 2012 Williston Basin tight oil production will be over 500,000 bpd. Eagle Ford will be over 100,000 bpd. 2020 North American tight oil production could be over 2,000,000 bpd. 2050 North American tight oil production could still be over 2,000,000 bpd. EERC . . . The International Center for Applied Energy Technology
How Much Bigger Can Bakken Get? Currently only 1%–2% recovery factor. Enhanced oil recovery technologies may improve ultimate recovery. Can CO2 be a game changer in the Bakken?
Tight Oil – Challenges Environmental Issues – Multiple-stage fracking can require millions of gallons of water. – The frack fluids may contain chemicals that have become the subject of public concern. – Flaring has been a source of environmental criticism.
Tight Oil – Solutions Environmental Issues – Development and application of frack fluid recycling.
– Reformulation of frack fluids to be more environmentally friendly. – Utilization of flare gas. • Infrastructure is catching up. • On-site and off-site uses for gas are developing.
Tight Oil – Challenges Public Perception Issues • The construction of thousands of well pads and truck traffic for the drilling and fracking of thousands of wells: – Wear and tear on roads and highways
– Traffic jams in rural communities
– Increased airborne dust – Adversely affect the “viewshed”
Tight Oil – Solutions • Increased use of technologies to drill multiple wells from a single pad: – Reduces the overall footprint of drilling operations.
• Construction of truck routes around communities. • Development and application of environmentally friendly dust control materials.
Tight Oil – Economic Projections North Dakota Example By 2012 1450 to 2940 wells/year, with 2140 being expected. • 100 to 165 rigs • This equates to 12,000 to 19,800 jobs 10- to 20-year life span for the Bakken play • 21,250 new wells • This equates to 3000 to 3500 long-term jobs Source: Mr. Lynn Helms, Director of the North Dakota Department of Mineral Resources, from a public presentation given in Williston, ND, on 8/3/2010. www.dmr.nd.gov/oilgas/presentations/ActivityandProjectionsWilliston2010-0803.pdf
Tight Oil – Economic Impact North Dakota Bakken Example A single well over its lifetime is projected to: Produce more than 575,000 barrels of oil. Generate over $20 million net profit. Pay approximately $4,250,000 in taxes.
Pay royalties of $6,900,000 to mineral owners. Pay salaries and wages of $1,550,000. Pay operating expenses of $1,900,000. Source: Mr. Lynn Helms, Director of the North Dakota Department of Mineral Resources, from a public presentation given in Minot, ND, on 9/1/2011. www.dmr.nd.gov/oilgas/presentations/MinotCOC2011-09-01.pdf
National Petroleum Council Report Prudent Development – Realizing the Potential of North America's Abundant Natural Gas and Oil Resources
Final Report Approved September 15, 2011 Web site where report can be downloaded: www.npc.org
Contact Information Energy & Environmental Research Center University of North Dakota 15 North 23rd Street, Stop 9018 Grand Forks, North Dakota 58202-9018 World Wide Web: www.undeerc.org Telephone No. (701) 777-5287 Fax No. (701) 777-5181 James A. Sorensen, Senior Research Manager [email protected]
