Bakken field is vital to American economic growth

The Bakken oil field isn't just a get-rich-quick ploy by oil future speculators, it's the keystone of America's energy future. Simple geography has made America an automobile society, leaving current generations with a ravenous thirst for black gold.

States like North Dakota, with its rich shale oil reserves, stand to benefit greatly from this economic equation while investors will reap huge profit margins.

The people of North Dakota have no trouble grasping the simple truths about energy: America needs more domestic supplies of oil and natural gas – and we need it sooner rather than later.

But North Dakota is in a unique position. We are one of the few states able to provide a much-needed supply to the rest of America. Perhaps that’s why a Harris Interactive poll recently revealed 66 percent of likely North Dakota voters support increasing access to domestic resources as a solution to America’s current energy challenges. North Dakotans understand the great opportunity beneath our soil and the responsibility that comes with it.

The Department of Energy forecasts domestic energy demand will increase

19 percent by the year 2030 – and more than 50 percent globally. With so much resource at our fingertips, failing to explore for oil and natural gas would not only harm America’s energy security, but potentially diminish our state’s economic outlook.

America’s government-owned Western lands and seafloors contain enough oil to power more than 65 million cars for the next six decades – and enough domestic natural gas to heat 60 million homes for 160 years. A distinct portion of these oil and natural gas resources sit within our state boundaries – and with every untapped deposit that we drill, new jobs are created and new streams of state revenue are produced.

Just look at our recent progress. In April, the U.S. Geological Survey called the Bakken Formation, at 3 billion to 4.3 billion barrels of oil, the largest continuous oil accumulation it has ever assessed. State revenue from this type of production jumped 39 percent last year to $251.7 million. If we have prospered this much already, additional access will only mean more jobs for hardworking residents and increased funding for roads, schools and hospitals.

And it’s not just North Dakota that understands the responsibility and opportunity inherent to energy exploration. The Texas economy, for instance, sees an additional $63 billion from the state’s oil and natural gas industry each year. And Louisiana? Its oil and natural gas industry pumped more than $1.4 billion into the bayou state in 2006.

Whether in the Gulf shore or our own backyard, these natural resources can be accessed in a safe, clean and efficient manner. The oil and natural gas industry has invested more than $90 billion over the past decade to improve operations and find innovative means to enhance exploration.

Drilling technologies have also come a long way. New methods minimize our environmental footprint and do little to disturb nature. We’ve also partnered with conservation and wildlife groups to maintain the balance between the needs of our business and the preservation of our environment.

For years, our state has experienced the benefits of domestic access. Solid jobs, steady salaries and additional revenue – each should send a message that resonates loudly with Congress and local legislators as they debate the issue of increased access. Through added royalties and strengthened employment numbers, North Dakota can single-handedly contribute to the growth and outlook of our national economy. When lawmakers return to Washington after their summer recess, Congress must lift the ban on domestic drilling and bring even greater opportunity to our state – and our entire nation.

MacIver, Bismarck, is president of the North Dakota Chamber of Commerce.

 Is Bakken Oil more important to prosperity than Zhu Zhu Pets? Yes.

Bakken takes Alberta's place as number one oil source

If you're looking for a hot oil play that will make your pocket book boom, check out Saskatchewan's Bakken oil formation. This place is crazy, shale as far as the eye can see just loaded with delicious light sweet crude. The oil is cheap to extract and already of a very high grade when it comes out of the ground. And did I mention there's millions of acres of it?

The time is now to take advantage of rock-bottom bear market prices. Hop into a hot oil stock today so you don't miss the next big black gold rush!

It might be mid-winter on the Prairies, but Saskatchewan is hot.

Especially for energy players active in the Bakken light oil play tucked into the southeast corner of the province.

Bakken is the new oilsands.

While not containing trillions of barrels of oil in place, it flies in the face of the pronouncements that there were no significant, conventional light oil pools left to be found in the Western Canadian Sedimentary Basin.

To put it in context, this is being hailed as the most significant find since the Pembina Cardium play discovered in Alberta in 1957.

Yes, it's that good.

For those in need of a history lesson, Pembina's reserves were estimated to contain 7.8 billion barrels of oil, of which 1.6 billion were recoverable. To date, more than 1.2 billion barrels have been produced and it's still going strong.

Big oil, say the engineering types, gets bigger.

What they mean is simply that when companies start to develop these big pools of reserves, they tend to find more.

By extension, then, the current estimate of the Bakken play containing three billion barrels is likely on the low side because the limits of the formation have yet to be determined.

"It's present in a very large area and continues to expand as the play develops. We don't know how big it will be," said Bob Johnson, vice-president of engineering with Sproule Associates Ltd.

Pembina covers an area of between 20 and 30 townships (each township is 93 square kilometres) and Johnson says Bakken could be as big.

The nature of the Bakken resource is analogous to the tight gas reserves being developed by companies such as EnCana in northeast B.C.

The oil and natural gas contained in the respective reservoirs are a bit tricky to drill, begin producing at high rates, decline during the first year of production and then level off to a steady rate for years to come.

Johnson says once they reach the sustainable production rate, the reservoirs last for anywhere from 25 to 50 years.

Just as compelling are the returns on this light oil.

Crescent Point Energy Trust -- which earlier this week announced a $370-million deal to increase its stake in the play by buying privately held Landex Petroleum -- said its netbacks were $62.71 per barrel on the Bakken oil it produced in the third quarter.

It goes without saying that those kinds of returns are tough to get in Alberta these days.

No wonder there has been what's tantamount to a mad scramble taking place in the region for the better part of two years.

In addition to Crescent Point -- which made two acquisitions in 2007 to expand its asset base -- Petrobank Resources and TriStar Oil and Gas have also been busy shoring up positions in the area through a series of deals. Petrobank bought Peerless Energy in late 2007 for its Bakken assets and TriStar bought Bulldog Resources for the same reason.

It's worth noting that the chairman of TriStar, Paul Colborne, is also on the board of Crescent Point and has long been keen on the potential of this play. TriStar was formed as a result of the merger between two trusts: StarPoint Energy Trust and Acclaim. Colborne was president and CEO of StarPoint; it bought a company called Upton Resources in 2003, a move that many analysts point to as Colborne's first exposure to the potential of the Bakken resource.

While the formation was discovered in North Dakota in 1953, and Canadian Hunter tried (unsuccessfully) to figure out how to exploit it in the early 1990s, the single biggest factor that has turned the Bakken into a viable resource is technology.

Unlike the Pembina formation, which has been developed using standard vertical wells, the Bakken play requires the use of horizontal wells.

These tend to cost about twice as much as a conventional well -- but at $100 US per barrel oil and very attractive royalty rates -- the numbers work quite nicely.

In the past 12 months, a Calgary-based company called Packers Plus has cracked the nut on how to get at these more challenging formations using horizontal drilling techniques.

More specifically, it used to be that the exploitation of these tight reservoirs -- whether gas or oil -- were dependent on where the natural fracturing in the reservoir occurred. Packers Plus has developed a technology that allows for companies to control where the fracturing takes place, avoid water and access multiple zones through the well bore.

"The technology has increased recovery rates by 50 per cent," said Tristone Capital's Chris Theal.

In a broader sense, the success of the Bakken formation illustrates the key role technology will continue to play as the energy sector around the world looks to unlock more fields that have been inaccessible because of the technical challenges.

Even better, it's more than a wee bit exciting that some of this is happening in Western Canada, a part of the world that had effectively been written off as not having any more big light oil pools to be found or developed.