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The Great Bakken Deception

Ronald R. Cooke
The Cultural Economist
December 3rd, 2009

Memo: To all those who claim the Bakken Formation has the potential to eliminate America’s dependence on foreign oil… And other silly nonsense.

Read (and Understand) The USGS Report
The following text is taken from the USGS data referenced in the e-mail you forwarded to me. Before you quote this report, and its associated data, you need to understand the physics and economics of upstream oil operations. I have emphasized several key USGS data points with italics.

To quote the USGS data
“The assessment of the Bakken Formation indicates that most of the undiscovered oil resides within a continuous composite reservoir that is distributed across the entire area of the oil generation window.”

“The formation consists of three members: (1) lower shale member, (2) middle sandstone member, and (3) upper shale member. Each succeeding member is of greater geographic extent than the underlying member. Both the upper and lower shale members are organic-rich marine shale of fairly consistent lithology; they are the petroleum source rocks and part of the continuous reservoir for hydrocarbons produced from the Bakken Formation. The middle sandstone member varies in thickness, lithology, and petrophysical properties, and local development of matrix porosity enhances oil production in both continuous and conventional Bakken reservoirs.”

“The USGS assessed undiscovered oil and associated gas resources in five continuous (unconventional) AUs and one conventional AU for the Bakken Formation …. For continuous oil resources, the USGS estimated a total mean (Bakken) resource of 3.65 billion barrels of oil, ….” (for that part of the Bakken Formation located in the United States.)

“There is no certain method to determine the exact volume of oil that is contained in the Bakken Formation or any formation. The Bakken Formation oil resource is much different than the oil resources of Saudi Arabia. The Bakken oil resource is what we refer to as a "continuous" or unconventional resource, whereas the oil resources being produced in Saudi Arabia and other Middle Eastern countries are conventional resources. Continuous or unconventional resources require more technical drilling and recovery methods that are much more costly and the oil recoveries per well are commonly much lower than in a conventional resource accumulation. However, the estimate of technically recoverable oil in the Bakken Formation is larger than all other current USGS oil assessments of the lower 48 states and is the largest "continuous" oil accumulation ever assessed by the USGS.”

“Oil is produced from the Bakken Formation shale in a manner that is a refinement of traditional oil field practice. Traditional oil fields produce from rocks with relatively high porosity and permeability, so oil flows out fairly easily. In contrast, the Bakken Formation is a relatively tight formation consisting of low porosity and permeability rock, from which oil flows only with difficulty. To overcome this problem, wells are drilled horizontally, at depth, into the Bakken and then water and other materials (like sand) are pumped downhole at high pressure (called hydrofracturing) to create open fractures, creating artificial permeability in these tight rocks. The oil can then flow more easily out of these fractures and tight pores. Traditional oil fields regularly employ hydrofracturing and non-vertical wells have also long been drilled. The technique has been fine-tuned for use in the Bakken and other similar tight continuous reservoirs.”

From “This Week in Petroleum”
released March 4, 2009, Energy Information Administration. “Proved reserves are only a small part of the oil that is likely to be produced from the Bakken in the future. In April 2008, the United States Geological Survey (USGS) published a geology-based probabilistic assessment of the undiscovered, technically recoverable oil resources in the Bakken Formation. USGS estimated that the Bakken Formation may contain from 3.1 to 4.3 billion barrels of technically recoverable crude oil with the most likely average (mean) being 3.65 billion barrels.”

However. Total U. S. proven crude oil reserves continue to decline. The Bakken discoveries have had little impact on proven crude oil reserves located in the United States.

Source: Crude Oil Proved Reserves, Reserves Changes, and Production,
Release Date: 10/29/2009, Energy Information Administration

So. What does this all mean? The 2006 EIA report on the Bakken has never been confirmed. Both the EIA and the USGS have revised their estimates of technically recoverable crude oil. The USGS has estimated the undiscovered available technically recoverable oil in the Williston Basin, which includes the Bakken Formation, at ~3.8 billion barrels. If we add the Canadian portion of the basin to the USGS estimates, total technically recoverable crude oil exceeds 5.2 Bbl. BUT:

  • This does NOT tell us how much of the estimated oil will be found.
  • This does NOT mean all of the found oil is economically recoverable
  • It does NOT mean there will be a net yield of energy (EROEI) from all possible wells.
  • And finally, these numbers do NOT tell us how much of this oil is accessible oil
To understand these four concepts read: “The Report on Oil Depletion” and the information on this blog. You can also find a really good discussion of the Bakken at: And finally, if you really want to know what lies ahead, read my book Oil, Jihad and Destiny (Amazon).

Less than 6% of the 3.8 Bbl of oil in the Williston Basin is cheap conventional oil. The other 94+% plus of this oil is locked in shale. Recovery rates are typically very low for oil locked in shale formations – the range might be from 15% to less than 1%. In 2008, the average oil output per well in the Bakken Formation was less than 32,000 barrels of oil per year or ~ 85 barrels of oil per day (EIA). Newer horizontal wells appear to be averaging north of 300 barrels per day. However, annual well production rates for even the best wells in shale formations typically deteriorate very quickly.

In 2008, the United States consumed approximately 5.4 Bbl of crude oil. Bakken production satisfied about 2.5 days of U. S. consumption (EIA).

The United States must import over 65% of its oil related hydrocarbons from Canada, Mexico, Venezuela, Nigeria, and other nations – including Iraq and Saudi Arabia. That percentage has been increasing almost every year. Although crude oil production in the Williston Basin is a valuable resource for America, and higher oil prices will justify increased drilling, annual rates of production will never satisfy more than a small percentage of our demand for gasoline, diesel and heating oil.

Now you know the truth.

Ronald R. Cooke
December 3rd, 2009
The Cultural Economist

About The Cultural Economist - Ron graduated with an A.B. in Economics from Bates College. He has been an auditor, line manager, computer salesman, marketing manager, product planning manager, and V. P. of Marketing. A management consultant by inclination, Ron has a comprehensive background in business development, product planning, market research, and industry analysis. He has authored multiple market research reports, contracts, business plans and operations research studies for corporate clients in 12 countries. Prior experience includes technology assessment, the evaluation of corporate financial performance, and the negotiation of corporate acquisitions.
Ron is a former instructor with UCSC, and developed the curriculum for a science based approach to decision analysis. He has pursued the study of Cultural Economics since 1969, and has authored "Oil, Jihad and Destiny," a thought-provoking research report on oil depletion (Opportunity Analysis - 2004, and revised in 2007), and "Detensive Nation," a book that redefines the role of government in an Energy Detensive EcoSystem (The Cultural Economist - 2007).

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