Moving up
North Dakota expected to move to No. 6 in oil production in the U.S. by end of yearBy ELOISE OGDEN, Regional Editor eogden@minotdailynews.com
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North Dakota's oil production is climbing so fast that it's expected to move to the sixth top-producing state in the country by end of the year, says the president of the North Dakota Petroleum Council.
"It's unbelievable to all of us in the industry. We are growing at about 6,000 barrels a day per month. In April, we broke the all-time record of 148,000 barrels in North Dakota which was from 1984," said Ron Ness, Bismarck, president of the N.D. Petroleum Council.
Although oil data is about two months behind, Ness said the data from July and August showed 172,000 barrels a day.
"Lynn Helms and I have both predicted that we will break the all-time record by the end of '08," Ness said. Helms, Bismarck, is director of the state Department of Mineral Resources.
"We've moved to No. 7 and we're going to surpass New Mexico and move to 6 maybe by the end of the year," Ness said.
He said he suspects North Dakota will also surpass Oklahoma, which is fifth in the nation for oil production but he did not give a timetable when he expects that might happen.
When that happens surpassing Oklahoma in oil production Ness said, "Now we're talking about seriously grabbing the attention of the oil industry in the nation."
Ness spoke to members of the Minot Area Chamber of Commerce's Energy Committee Thursday at the group's monthly meeting in The Vegas Motel in Minot.
He said there are between 84 and 90 rigs actively drilling in the oil field on any given day and there's so many now that it's hard to keep track of them because they're moving all the time. He said they estimate, given all things being equal, North Dakota will surpass 100 rigs maybe by the end of the year.
This spring the U.S. Geological Survey estimated that up to 4.3 billion barrels of oil can be recovered from the Bakken using current technology. The Bakken is considered, according to that federal agency, to be the largest continuous oil accumulation it has ever assessed.
The Bakken Formation covers parts of Montana, North Dakota and Saskatchewan. Oil was first produced from the Bakken more than 50 years ago but recent technology with horizontal drilling has increased the drilling activity in the Bakken. Mountrail County is a hotplay area for Bakken crude oil.
Ness said the media hype about the Bakken Formation has been just incredible and drawn interest from people in many countries. "We've sold our 'The Bakken Rocks' T-shirts all over North America and all over the world," he said. The T-shirts were done by the N.D. Petroleum Council.
"This is an expensive big boys game," Ness said. "The Bakken is not for the weak of heart." He said drilling a Bakken well costs several million dollars.
Of the 85 rigs actively drilling in North Dakota last week, Ness said all but three are in the Bakken. As of Sunday, the N.D. Oil and Gas Division, which is a division of the N.D. Department of Mineral Resources, reported 86 rigs actively drilling in the N.D. oil fields.
Ness said there seems to be a lot of development interest on the Fort Berthold Reservation. "It's been 21 years since there's been a well drilled on the reservation," he said.
He said some of the companies think the Bakken fairway is moving north toward Powers Lake and Bowbells, and then they would suspect it may go west.
As far as why the development really hasn't moved into Ward County, he said, "My version is most of the Ward County players have pretty big lease holds in and around Mountrail County and we're at a time right now when companies got these leases two to four years ago. Those leases will expire so you certainly want to develop your leasehold within an area that you know is productive, then they may start stepping out. That's some of it."
Bob Horne, a N.D. legislator and energy committee member, said leases done four or five years ago were quite reasonable when people didn't know yet what was happening. "If they don't drill those leases before they expire and try to renew them, they'll have a lot different outlay," he said.
Ness said he heard about a piece of land in Mountrail County which apparently had been forgotten or overlooked and when leased it was leased for several digits.
Instead of being leased for like $40 an acre, Horne said the new numbers for leasing might be for $300, $400 or $500 an acre.
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Pipeline capacity
Ness said the lack of pipeline capacity in the state to get the crude oil to the markets is a problem but he said some companies are finding an answer to their transportation needs with the railroad.
He said rail-loading facilities have been established in Ryder, Stampede, Dore and Minot, and now Beulah will open one. He said there's also been some talk about a rail-loading facility at Williston.
But Ness said the risk of rail is "the minute you put a pipeline in, your oil goes in the pipeline."
Ness said when he and Helms did a 'white paper' about rail they didn't think rail-loading facilities would be a possiblity. "But industry will find a way to get their product to market," Ness said.
As far as building a refinery in North Dakota, Ness said a state refinery is discussion at this time. "I think if you're going to build a grassroots refinery, North Dakota certainly is a place to get it done," he said. But he also said "it's not as easy a market to compete in as we think."
Ness said economic development data will be released in December. "It probably will be mindboggling," he told the Minot group.
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Wilkie
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09-29-08 2:40 PM
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Good now just maybe the land that we have around Grenora Nd, we may finally profit from it.The Turtle Mountain Tribe has control over the lease.
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