8-27-08 by dugan
A friend asked me today about all the investment hype and other excitement surrounding the so-called Bakken Formation oil reserves. Here’s the gist of what I told him, which might make him decide to keep the retirement fund under the mattress.
Yes, there’s a bunch of oil in the deep, deep pockets of hard rock in the Bakken formation, primarily in North Dakota, Montana and south-central Canada. But it’s really hard to get at, which is why the plains look nothing like West Texas.
In addition, the most productive technology, horizontal hydraulic fracturing, uses a lot of water (scarce enough already in that dry upper Midwest) that can’t likely be recovered for re-use. The environmental damage isn’t at the level of mining shale oil, but water is increasingly what’s most fought over.
The revived Bakken excitement is due primarily to a sparse 2-page "fact sheet" and press release issued in April by the U.S. Geological Survey. Its conclusion– that up to 50% of the Bakken oil could be recoverable, a huge increase over previous assessments–raised eyebrows in science circles, though obviously not among Internet get-rich-quick schemers.
Here’s a link, from OilDrum, to a neutral discussion of Bakken recoverability, and a critique of the USGS statement.
The critique takes a close look at the lack of supporting data or reasoning in the USGS report. I can’t help smelling a political reason for the partial report–a sort of bread and circuses distraction on behalf of the "drill now, drill everywhere" crowd.
It’s worth your while to dig down to the discussion of charts 4 and 5, which get to the heart of the recoverability problems. The gist is that the rock is dense and the oil stays in the rock pocket where it was produced, rather than migrating through cracked or porous rock to big reservoirs, as in the Gulf of Mexico. That means less production from each pipe.
Bottom line: Putting down a straw, even a horizontal water-assisted straw, can bring back a big gulp of Bakken oil. But the straw doesn’t keep refilling for long.