Autonomous Vehicle Consultant

The Energy Information Agency (EIA) of the Department of Energy (DOE) recently reported increased oil production from the Bakken formation, an area of about 200,000 square miles located in Williston Basin found in parts of North Dakota, Montana and Saskatchewan. “North Dakota’s oil production averaged 660 thousand barrels per day (bbl/d) in June 2012, up 3% from the previous month and 71% over June 2011 volumes.” The graph below shows North Dakota oil production from the Bakken formation from January 2005 to May 2012.

According to the Oil & Gas Journal, “A conservative estimate of oil in place in the Bakken is 300 billion barrels, but it is locked in low permeability rock. Continental Resources Inc. places the quantity of recoverable oil in the US Bakken at as much as 24.3 billion barrels. Horizontal drilling and hydrofracturing make commercial scale oil production possible.”

There are dozens of operating companies located in the Bakken region. Some of these include Conoco Phillips, Encana Corporation, Gulf Port Energy Corporation, Hess Corporation, and Marathon Oil Corporation. Recently, ExxonMobil became a player with a payment of $1.6B in cash for Denbury Resources’ Williston Basin assets.

Statoil, a state-owned Norwegian company, is a major Bakken player with the expectation of producing 500,000 barrels of oil equivalent by 2020. “The majority of the increases in North America will come from U.S. operations focused in the Marcellus, Eagle Ford and Bakken shale plays,” said Bill Maloney, president of Statoil North America. Statoil has augmented its activity by leasing 1,000 railroad cars to relieve the oil transport bottleneck from North Dakota due to insufficient pipeline capacity.

North American oil plays are renewing Statoil’s declining oil reserves in the North Sea. The following graph illustrates the fact that Norway reached peal oil production in the late 1990s with declining production ever since that time.

The presence of Statoil has caused scant notice by the mainline news media. Would this have been the case if a Chinese company were producing oil in the United States?

Conclusion: One day, the oil production curve for the Bakken reservoir will resemble the declining Norwegian oil production curve.  The many Bakken oil-producing companies will then rush to the next great discovery to feed an energy gluttonous society. This way of doing business is not sustainable.