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By now, most are familiar with the oil boom in the Bakken Formation, located mostly in western North Dakota and eastern Montana (and if not, go here and here). But many might not know that the region is only starting to suck hard on the oil straw.
The state saw production leap from less than 100,000 barrels per day in 2005 to about 350,000 toward the end of last year. Most of that production comes from oil shale in the Bakken Formation, where studies have identified up to 4 billion barrels of recoverable oil.
But continued geologic research is showing the potential for still more oil (as well as natural gas) above and below the Bakken (in formations dubbed Tyler, Lodgepole and Spearfish). One particular formation, Three Forks, lies beneath the Bakken “interval” of oil shale and holds an estimated 1 billion to 2 billion barrels of oil.
A December report by the Industrial Commission of North Dakota noted that the new discoveries, coupled with expected improvements in extraction technology, could double oil production in the state by the end of this decade, and possibly sooner (see chart; the geologic oil basin reaches into South Dakota, but little production currently exists, or is predicted there). Experts, the report said, “predict at least an additional ten to twenty years of intense drilling and development, followed by several more decades of continued petroleum production.”
Ron Wirtz is a Minneapolis Fed regional outreach director. Ron tracks current business conditions, with a focus on employment and wages, construction, real estate, consumer spending, and tourism. In this role, he networks with businesses in the Bank’s six-state region and gives frequent speeches on economic conditions. Follow him on Twitter @RonWirtz.
