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AS I SEE IT

Posted 8/01/12 (Wed)

By Neal A. Shipman
Farmer Editor

For most people in western North Dakota who have lived through the previous ups and downs of the oil industry, it is pretty easy to second guess what is going on currently and say that all of the activity that has been associated with the “Bakken Boom” over the past two or so years is going to go away.
And if what happened in the past, with the oil companies coming and going with every boom and bust, was a true indicator of what can be expected this time around, they would stand a pretty good chance of being right.
But this time around, it appears that the Bakken oil play is going to be much, much bigger than anyone, and that includes the experts in the oil industry, ever expected. And the length of the development of this region’s oil and gas reserves isn’t going to be counted in years, but rather decades.
So why the new optimism that the development of the Bakken is not just another short-term boom?
First, there was the state-funded study which was released last week that predicts North Dakota’s oil output may jump threefold by 2025 and natural gas production in the Williston Basin could quintuple by that same date.
To put those numbers into perspective, the state’s oil production in May was about 640,000 barrels per day, while North Dakota also produced a record 650.8 million cubic feet of natural gas in April. If the development follows the study’s projections, oil production in the Williston Basin could grow to 1.8 million barrels per day by 2017 and to more than two million barrels per day by 2025, while natural gas production could grow to three billion cubic feet by 2025.
Those are staggering numbers to be sure and they have the state’s oil and gas officials rightfully, very excited.
According to Lynn Helms, director of the North Dakota Department of Mineral Resources, not only does this mean that there is a lot more oil and natural gas that is going to be recovered in North Dakota, but more importantly, the economical lifespan of every Bakken well being drilled in western North Dakota is now estimated to be about 45 years instead of the 29 years previously thought.
The second key component of ensuring that North Dakota’s oil and gas industry continues to grow and flourish is the willingness of private companies to invest the needed billions of dollars into the needed infrastructure to get the oil and natural gas from western North Dakota to market.
One company that has been making that investment is ONEOK Partners, who has recently announced that they intend to build a second natural gas processing plant near Watford City. The Garden Creek II plant, which will cost between $310 and $345 million to build, is expected to be in service during the third quarter of 2014 and will be built adjacent to the company’s existing Garden Creek natural gas processing plant, which was completed in December 2011.
In addition to their expansion plans in McKenzie County, ONEOK is also in the process of building two other natural gas plants in Williams County. Once all of these plants are operating, the company will have invested between $3.6 to $4.2 billion in the Bakken and will have the capacity to process 490 million cubic feet of natural gas a day.
With literally thousands of new wells being proposed to be drilled into the Bakken and Three Forks formations in the years ahead and with the willingness of energy companies to continue to step up to the plate and invest billions of dollars in western North Dakota, it is obvious that the “Booming Bakken” is going to be here for a long, long time.