North Dakota's chief regulator of the oil and gas industry says the United States and North America could achieve oil and gas independence within 10 years the way energy development is going.
"Within a decade, we have the possibility of being oil and gas independent on this continent. We have the possibility of producing all the oil and natural gas in addition to the coal, uranium and everything else we have to be completely independent from any other part of the world. That is really important," said Lynn Helms, Bismarck, director of the North Dakota Department of Mineral Resources.
"That is not just about lowering the cost of gasoline and diesel, although it will help there. But those are worldwide fungible commodities. We're not going to significantly (see) huge drops in the price of gas and diesel. It will help to bring that down.
Submitted Art • This map, courtesy of the North Dakota Department of Mineral Resources with information from the U.S. Energy Information Administration, shows the North American shale plays, including the Bakken shale play in North Dakota. The U.S. and North American continent could be only 10 years away from being oil and gas independent, the N.D. chief oil and gas regulator says.
"But it's really about American jobs and national security. That's what it's all about. That needs to be our message as we go forward," Helms said.
Helms spoke Thursday at the North Dakota Association of Oil and Gas Producing Counties' annual meeting at the Holiday Inn Riverside in Minot.
Showing a map of North America and all the shale basins across the continent, Helms said, "What we have learned initially through the Barnett Shale outside of Dallas, Texas, and now the Bakken is that our continent has unbelievable shale resources."
He said an updated map that will come out later this year also shows Alaska where there's a handful of shale basins.
But in the lower 48 states, Canada and Mexico there are 45 shale basins, Helms said.
"We've developed the technology here in North Dakota to be able to produce those 45 shale basins," Helms said. He said five are oil productive and the other 40 are gas productive.
"Our natural gas future in this country is extremely secure," Helms said. "In fact, the natural gas industry has done such a great job that they're struggling economically right now. That has kind of been to our benefit in terms of manpower, machines and stuff that we can get in North Dakota."
Of the five shale basins that are oil prone, Helms said one oil company official said only two really matter: the Bakken and the Eagle Ford. The Eagle Ford is another shale play near the Barnett in Texas.
"Those are the two that are going to move the needle in North American and U.S. production," Helms told participants at the Minot meeting.
Helms said North Dakota's Bakken has only one competitor, the shale play in Texas, and it has been a serious competitor this year. "It has drawn rigs away from the Bakken," Helms said. He said the play in Texas is maybe a year or two behind the Bakken play.
Referring to a map of the Bakken in North Dakota, he pointed out the portion in the western part of the state that has been identified as 100 percent probability area.
"If you drill a well inside there, you'll produce oil and three times out of four, the well will make more than a 10 percent rate of return for its investors," Helms said.
An area just outside the 100 percent probability area, he said, might have a little bit more risk, but it's thermally mature and the Bakken and Three Forks Formation will be oil saturated in that area.
"And then there's a more risky kind of conventional part of the Three Forks that lies anywhere from 30 to 70 miles outside the mature Bakken area that will be eventually explored," Helms said.
He said there has been quite a bit of talk about the Tyler Formation in the southwestern part of the state but he said it is suffering from crowding out events.
"The Bakken has absorbed all of the manpower, machinery and money and everything that the industry can bring to bear on oil and gas in North Dakota. So the Tyler is moving a little slower than we had originally anticipated," Helms said.
He said the same thing is going on with the Spearfish Formation in central Bottineau County.
"They have identified the area that's oil saturated," Helms said, referring to the Spearfish. "It will eventually be drilled." But, he said, "these wells will have 75,000 to 100,000 barrels of oil and not 750,000 barrels of oil like the Bakken will."
The company that initially was in the Spearfish Play has left and now Canadian companies are there. He said they've had two drilling rigs there since fall. One of the differences is this play will take 24 wells per section, so rather than 18 wells in two sections, they'll have 24 wells per section to extract the oil.
Helms said one of the more exciting things that has started to play out in Ward, Renville and Burke counties is using some Bakken technology for some of the traditional or earlier day Mission Canyon producing areas.
"That's going to see a renaissance at some point in the future as well," he said.
Planners for future projections have lowered their rig count slightly.
"We used to talk about 225 rigs. It takes a little longer with 200 rigs but we're going to stay (at) plus or minus of 200 rigs for a very long time," Helms said.
Using scenarios of where the oil-producing counties are projected to be in five years, he said those put the state at 1.6 million (barrels of oil a day) or right in that neighborhood.
"Texas made 1.9 million a day in July. I don't know if we're going to catch them, but we're going to certainly give them a good run," Helms said.
He said there are some challenges, including transportation of the crude oil.
"Right now, everything is moving by truck. Traditionally, we move 25 percent of the oil by truck and 75 percent in pipes."
Helms said 95 percent of the oil in Williams County is being moved by trucks. "That's not sustainable. We can't do that long term. We've got to get those pipeline right of ways and easements." He said the crude needs to get into pipes and moving to the rail transportation centers, refineries and pipeline rail heads.
McKenzie isn't far behind with 90 percent of its oil being moved by trucks, Helms said.
Mountrail County is ahead of the rest of the counties but still trucking 55 percent of its crude oil, and that's not a paradigm that can be lived with long term, he said.
As to flaring, he said he was delighted to see that flaring in the state finally got back below 30 percent, with 29 percent in August.
"What I don't like to see is the number 29 percent of our gas being flared in North Dakota is more gas than the entire state produced in 2007."
He said seven natural gas plants are being expanded or built a $4 billion investment. But he said a new study shows this needs to double to deal with the large-scale gas production that's coming out of these wells toward the end of their lives.
He said they need lots of solutions for stranded natural gas. That's why you see the Industrial Commission looking at things like flared gas fertilizer and flared gas diesel fuel.
"Even when we're back down at 10 percent flaring, we're flaring what will fuel 1 1/2 natural gas plants and that's a lot that's going to be stranded gas. There is a lot of work to do in that arena," he said.