North Dakota’s Bakken Shale Oil Boom and Risks To Water

Bakken Shale oil and gas development

Over at Circle of Blue, where I serve as senior editor, we’ve been working on Choke Point: U.S., a series of original articles about the tightening contest between rising energy demand and diminishing supplies of fresh water. In our latest chapter, we explored the big boom in oil and gas production on the northern Great Plains, where energy companies are tapping the “unconventional” Bakken Shale.

Two miles beneath North Dakota, and below parts of Montana and Saskatchewan is the 200,000-square mile Bakken Shale, a layer of tightly squeezed carbon-saturated rock. The US Geological Survey conservatively estimated two years ago that the Bakken formation contained over 4 billion barrels of recoverable oil, and tens of billions of cubic feet of natural gas. Below the Bakken lies another layer of oil shale known as the Three Forks that also shows signs of being a big oil producer. Industry petroleum engineers say the Bakken alone contains many times more oil and gas than the government estimates.

Frenzy of Exploration and Development
Whatever the case, the Bakken has set off a frenzy of fossil fuel exploration and development that is turning the northern Great Plains into one of the nation’s primary oil and gas producers. This year North Dakota will produce over 100 million barrels of oil – triple what it produced in 2004. Only Texas, Alaska, and California produce more. Three years ago, North Dakota was barely in the top ten oil producers. The state this year also will produce about 100 billion cubic feet of natural gas, putting it 19th among states.

In North Dakota, almost 150 oil and gas drilling rigs are operating this month, nearly tying a state record, and more rigs than all but two other states. Thousands of oil field trucks jam remote two-lane highways that not long ago were so empty people could virtually picnic on the centerlines. More than 7,000 laborers from other states have migrated to North Dakota’s oil and gas fields, according to the state Job Service, but the state unemployment rate has dropped to 3.6 percent – the nation’s lowest. When North Dakota’s budget cycle ended in June, Budget Director Pam Sharp reported an $800 million surplus.

“It just almost boggles the mind,” the state’s top oil and gas regulator told a veterans group in Minot on September 2. “It is not like the traditional oil and gas play.” Just how different is illustrated by these statistic: Oil wells in the Bakken Shale are capable of producing 4,000 barrels a day or more, according to state figures. Just one in 100 wells drilled into the Bakken Shale fail to yield marketable quantities of oil or gas, according to industry executives.

Not Addicted, Devoted to Oil
America isn’t addicted to oil, as Presidents George W. Bush and Barack Obama have contended. Rather, America’s relationship to oil more closely resembles insistent devotion, so much so that as the last barrels are being sucked out of the “conventional” pools of oil that lie below the land and sea, American energy companies are working at a frenzied pace to accelerate the next era of hydrocarbon development. They are spending hundreds of billions of dollars annually to tap, transport, and process fuel from what the oil industry and government engineers call “unconventional” reserves – the tar sands of northern Alberta, the oil shales of the Great Plains and Rocky Mountain West, the gas-bearing shales of Texas, the Upper Great Lakes, and the mid-Atlantic states.

These and several more carbon-rich reserves around the nation contain trillions of barrels of oil – more than is currently recoverable from conventional reserves —  and hundreds of trillions of cubic feet of natural gas. Though geologists have been aware of their existence for decades, the persistently high prices for oil and gas over the last decade, and the industry’s bet that they will remain high, have made unconventional reserves profitable to pursue.

The federal government and states are more than happy to encourage the development with billions in direct grants, tax incentives and subsidies. But the risks to the nation’s well being are stark and disturbing. Oil and gas production from unconventional reserves is extending the profligate and polluting fossil fuel economy. More importantly, turning sand and rock into oil and natural gas is producing more damage to the land, more climate-changing emissions, and using more of the nation’s diminishing supplies of fresh water than the conventional reserves they are replacing.

Big Money
No one in the oil and gas industry, and few charged with regulating its practices, seem to care. The scale of the industrial enterprise racing to tap, transport, and process the fuel is immense, expansive, and growing. Natural gas developers are injecting billions of gallons of freshwater under super high pressure into deep gas-bearing shales in the Northeast, Upper Midwest, and Texas and Oklahoma to fracture the rock and are now producing more than half of the nation’s natural gas. The annual investment – more than $80 billion.

American energy companies, joined by their European, Canadian, Chinese, and Korean competitors, are spending $15 billion annually to turn the tar sands of northern Alberta into 1.3 million barrels of oil annually and production is increasing 10 percent a year. Most of that oil – 1.1 million barrels – is exported to the United States, where pipeline developers are spending $30 billion to move it to a network of U.S. refineries in the Great Lakes, the Mississippi River Valley, Oklahoma and the Texas Gulf that are undergoing $20 billion in expansions and modernizations.

In North Dakota nearly 1,000 wells are being drilled annually at a cost of more than $7 billion. Enbridge, the Canadian pipeline developer, is spending $500 million to expand its North Dakota network. Amerada Hess is spending $500 million to expand one of its natural gas processing plants. Oil and gas developers, spurred by the North Dakota experience, are leasing hundreds of thousands of mineral rights in Wyoming and Colorado and starting to drill into the Niobrara Shale, a similar deep oil shale reserve.

Another Energy Era Opening
Many Americans, of course, have been aware since the 2008 presidential election that the U.S. was at the vanguard of a new energy era. They just thought it would be the transition to clean energy. And largely as the result of the $80 billion in grants and tax incentives contained in last year’s stimulus bill, the U.S. is indeed moving to the earliest stages of what could be a genuine low-carbon energy. Wind farms now account for more than 35,000 megawatts of generating capacity, equal to 35 big coal-fired plants. The first new utility-scale solar thermal plant in a generation was just approved in California, and state and federal regulators are reviewing applications for dozens more in that state, as well as Nevada, Utah, and Arizona. The auto industry is introducing more efficient hybrid-electric and all-electric cars, and in Michigan 17 new manufacturing plants are under construction or are permitted to make lithium lithium-ion batteries for the new vehicles.

But what most Americans are not aware of is that a much larger, more dangerous, and more powerful unconventional energy era is well under way. Its principal aim is to perpetuate the fossil fuel age they know best and actively encourage.

— Keith Schneider

Bubbling and Crude: Gulf Coast Spill Reflects Devotion to Wealth, Power, and Oil

On March 17, two weeks to the day before President Barack Obama laid out a new plan to expand offshore oil exploration in the United States, a government auction of federally controlled oil and gas reserves in the Gulf of Mexico was held at the New Orleans Superdome. It took just a few hours for 77 energy companies to pledge $1.3 billion to the U.S. Treasury to look for oil and natural gas across a 2.4 million-acre expanse of bottomlands 200 miles from shore, and in most cases thousands of feet below the surface.

The lease sale, one of the most lucrative on record, bolstered the Gulf’s global reputation as one of the hottest deepwater oil and gas plays on Earth. The Gulf of Mexico is responsible for a quarter of the 5.5 million barrels of oil produced daily in the U.S., according to the Department of Energy. And of the 1.4 million barrels produced daily in the Gulf, 1.1 million barrels comes from over 100 deep sea production platforms. The Interior Department predicts that by the end of the decade, deep sea production in the Gulf could reach nearly 2 million barrels a day.

See USCAN Oil Spill Page

Semi-submersible drilling platform

Source: The Economist

Though offshore oil production is dangerous – 165 people died when an offshore platform exploded off the coast of Scotland in 1998; 10 more people were killed in a drilling rig explosion off the coast of Brazil in 2001 – a kind of Titanic syndrome had set in with Gulf coast oil explorers. The high-tech, semi-submersible, nearly $1 billion floating drilling platforms that operated in the deep Gulf waters were seen as too big, too modern, too well-equipped to fail.

Moreover there is so much oil (and natural gas) beneath the deep Gulf bottomlands – 85.9 billion barrels of oil, according to several estimates – and so much money to be made at $70 to $100 a barrel, that downplaying the risks made economic and political sense. Federal drilling permits obtained by developers normally did not require extensive and time-consuming analysis of the environmental risks, the government has acknowledged.

On April 20, an explosion and fire aboard Transoceans’ Deepwater Horizon drilling platform, which was operating under contract to BP, killed 11 workers. The accident provided the latest unmistakable evidence of the workplace hazards of deep sea exploration. Then two days later, on Earth Day’s 40th anniversary, the Deepwater Horizon sank and simultaneously produced an oil slick that the government says is growing by about 5,000 barrels of oil daily.

America Awake?
By any measure, the Gulf spill has reawakened the nation and magnified the human, environmental, and political consequences of oil production, especially from such treacherous places as the deep ocean. But the spill has not yet made clear what, if anything, the nation is prepared to do in response.

Indeed, the Deepwater explosion and the spreading slick are apt metaphors for an era of striking domestic risks related to energy production and consumption and growing uncertainties about how to reduce them.

Not Santa Barbara, Not 1969
There is no longer much reasoned debate that America’s devotion to fossil fuel, and especially to oil, has contributed to dangerous energy insecurity, rising atmospheric concentrations of climate changing gases, increasing costs, decreasing incomes, and a ferocious national recession. Yet the national response is so different than the  January 1969 oil spill in Santa Barbara, California, which soaked the beaches with crude oil. That spill produced a momentous national that helped to launch Earth Day and a decade of policy making that cleared the skies and cleaned the waters.

In contrast the Deepwater spill, so far, has produced modest public concern nationally and little more than that.

President Obama on April 30 announced he would suspend his March 31 decision to open new areas to offshore exploration pending a full investigation of the Deepwater accident. In the Senate, where a climate and energy bill has been delayed because of partisan infighting, lawmakers debated whether the Gulf spill would 1) break or 2) cement the deadlock.

It is clear the United States needs a new energy policy. The devastating spill has heightened awareness on Capitol Hill to the dangers of U.S. dependence on oil. Democratic Senators Robert Menendez and Frank Lautenberg of New Jersey, and Bill Nelson of Florida held a news conference this week to alert their colleagues that including additional offshore oil exploration has no place in a comprehensive climate and energy bill.

Halting the Spill
In the Gulf, BP says it is moving as fast as it can to plug the well and on Wednesday the company announced that it had stemmed one of three leaks in the pipe that once attached the well to the Deepwater drilling platform. Fishing in the coastal waters, some of the most productive fishing grounds on the planet, has been suspended. Meanwhile the governors of Louisiana, Alabama, Mississippi, and Florida expressed concern about the expanding spill, which was drifting closer to their shores.

Production Data by Year
Deepwater Production
(WD > 1000 Ft)
Total GOM OCS Production % of Total Production
Year Oil, STB Gas, MCF Oil, STB Gas, MCF Oil Gas
1985 21,053,752 33,849,349 350,345,117 4,057,692,707 6.009 0.834
1986 19,077,066 36,900,361 355,542,244 4,043,350,172 5.365 0.912
1987 17,070,926 44,259,499 327,567,672 4,524,823,392 5.211 0.978
1988 12,984,552 38,228,499 301,206,145 4,577,391,080 4.310 0.835
1989 10,007,573 31,889,109 280,717,909 4,636,327,746 3.564 0.687
1990 12,141,988 30,502,933 274,588,473 4,907,774,159 4.421 0.621
1991 22,886,754 58,434,483 294,773,846 4,707,640,841 7.764 1.241
1992 37,295,127 87,256,174 304,865,294 4,650,566,185 12.23 1.876
1993 36,769,914 119,895,532 308,595,948 4,655,807,596 11.91 2.575
1994 41,803,238 159,473,125 314,096,027 4,823,738,315 13.30 3.306
1995 55,200,884 181,019,918 345,074,597 4,778,657,050 15.99 3.788
1996 72,213,069 278,233,940 368,869,292 5,076,875,432 19.57 5.480
1997 108,514,650 381,759,185 411,622,518 5,145,646,361 26.36 7.419
1998 159,232,680 560,475,922 444,286,882 5,041,746,574 35.84 11.11
1999 225,089,761 845,581,180 495,172,107 5,057,740,045 45.45 16.71
2000 271,144,316 998,859,653 523,029,835 4,958,172,377 51.84 20.14
2001 315,392,362 1,178,429,028 558,790,340 5,060,515,587 56.44 23.28
2002 348,566,124 1,286,974,486 567,887,406 4,526,660,570 61.37 28.43
2003 350,151,883 1,425,729,552 561,457,768 4,428,661,841 62.36 32.19
2004 347,916,489 1,396,450,720 535,313,731 4,005,649,257 64.99 34.86
2005 325,565,912 1,189,574,009 466,916,529 3,155,021,736 69.72 37.70
2006 341,286,543 1,093,900,026 472,034,405 2,921,947,061 72.30 37.43
2007 328,111,873 1,027,012,933 468,007,128 2,812,063,179 70.10 36.52
2008 310,628,395 997,860,793 421,221,179 2,328,093,003 73.74 42.86
2009 454,502,063 1,094,148,891 566,000,231 2,427,822,032 80.30 45.06
Deepwater Production Increase – Year to Year
Year % Increase, Oil % Increase, Gas
1985 to 1986 -9.3 9.01
1986 to 1987 -10. 19.9
1987 to 1988 -23. -13.
1988 to 1989 -22. -16.
1989 to 1990 21.3 -4.3
1990 to 1991 88.4 91.5
1991 to 1992 62.9 49.3
1992 to 1993 -1.4 37.4
1993 to 1994 13.6 33.0
1994 to 1995 32.0 13.5
1995 to 1996 30.8 53.7
1996 to 1997 50.2 37.2
1997 to 1998 46.7 46.8
1998 to 1999 41.3 50.8
1999 to 2000 20.4 18.1
2000 to 2001 16.3 17.9
2001 to 2002 10.5 9.21
2002 to 2003 0.45 10.7
2003 to 2004 -0.6 -2.0
2004 to 2005 -6.4 -14.
2005 to 2006 4.82 -8.0
2006 to 2007 -3.8 -6.1
2007 to 2008 -5.3 -2.8
2008 to 2009 46.3 9.64
Average (through 2008) 16.7 18.3

Source: Minerals Management Service

— Keith Schneider