Oil experts keep eyes on Tyler Formation

An increase in leasing activity has oil experts predicting an expansion of the oil boom western North Dakota is currently experiencing, and Bowman County could be at the heart of that activity.

 Posted Dec. 7, 2012


Pioneer Publisher & Editor

An increase in leasing activity has oil experts predicting an expansion of the oil boom western North Dakota is currently experiencing, and Bowman County could be at the heart of that activity.

While the Bakken formation has received the bulk of the attention, and the oil drilling, or fracking, during the recent oil boom, a smaller Tyler Formation, is drawing activity. Alison Ritter of the state’s Department of Mineral Resources said the state’s best estimate for the Tyler Formation is projected at 1 billion barrels. The Tyler Formation, also called the “baby Bakken,” is comprised of sandstone, limestone, siltstone and some shale and sits about a half mile above the Bakken. It is thinner and shallower than the Bakken and contained in a smaller area. Exploration is likely not to take off for another three to five years, but when it does, it could have the impact that the Bakken did to communities north of Bowman, such as Watford City, Williston and Killdeer.

Currently, Bowman County produces 800,000 barrels of oil a month on average. That is projected to increase to 1.8 million barrels a month in five years, according to three different sources including Bowman Mayor Lyn James.

Originally, most of the oil production from the Bakken was in Montana, but in 2007, a Houston oil company literally struck it rich near Parshall. The North Dakota state legislature also passed an oil-drilling tax break that same year and the number of wells drilled in the state’s portion of the Bakken jumped from 300 in 2006 to 457 a year later, according to information released by the state’s mineral department.

Those same sources indicate North Dakota’s oil production peaked at 145 barrels per day in June of 2010. Though the number of wells has doubled during the next 18 months, oil production per well remains essentially unchanged while total oil produced continues to increase.

North Dakota’s first well was established in 1953 and produced 175 barrels per day. Twenty years later, the state’s number of wells was at 14 after peaking with 36 wells a number of times during the late 1960s.

Oil activity in North Dakota had very little growth during the next dozen years. Starting in the eighties, the number of state wells started to increase rapidly, going from 17 wells at the start of 1980 and climbing to 61 by the end of 1982. Two years later, North Dakota had 76 wells drilling – the first time in the state’s history to have more than 70 wells active.

Oil activity continued a slow but steady growth during the rest of the decade. The state crossed the 80-well threshold in 1986 and a year later tallied 90 wells. In 1989, the state crossed the century mark with 103 active wells and that’s when the first oil boom really hit the state. By the end of 1990, there were 193 wells producing in North Dakota. A year later, the state tallied 229 active wells.

North Dakota peaked with 256 active wells (once in 1993 and again once in 1994) before oil activity started to slow. By 1999, the number of producing wells in North Dakota was down to 186, but the state enjoyed a slow increase in oil activity afterwards and maintained between 190 and 205 active wells during the next five years when the state experienced a slight drop – down to 185 active wells (2004).

A year later, though, the foundation for the second oil boom was certainly being established as 35 more wells were active in 2005. By the end of 2006, the number of active wells climbed to 289 and the oil boom exploded. In 2007, the number reached 446 (a more than 50 percent jump). By the end of 2008, the number of active wells was at 868 (nearly doubling the previous year’s totals).

The state tallied a thousand active wells for the first time in state history in 2009 with 1,332 wells by the end of the year. That record didn’t last long as by the end of 2010, the state had 2,016 wells active.

And the number of active wells continued to climb with a high of 3,390 wells by the end of 2011 and 4,629 wells by late 2012.

The North Dakota Petroleum Council in its November newsletter highlighted the impact on the state’s economy of the oil boom. The press released stated the following:

“In July, Manufacturing News, Inc., reported that industrial employment in North Dakota increased by 15.8 percent between May 2011 and May 2012 for a total gain of 5,899 industrial jobs thanks largely to the development in the Bakken. According to the report, oil and gas extraction increased from 2,537 industrial jobs last year to 7,011 jobs this year – a 176 percent increase.”

And, the oil speculation of the Tyler Formation is perking interest in South Dakota as well. South Dakota produced a total of 1.6 million barrels of oil in 2011. North Dakota produces that much in four days. But if the Tyler Formation proves fruitful, that could all change.

“We think it could be a couple of years before they unlock the secret of drilling the Tyler,” said Lynn Helms, the director of North Dakota’s Department of Mineral Resources. “In our mind, we look at this as the equivalent of Bakken test wells in 2004. Things were very slow in the Bakken play for about two years until they cracked the code.”

And if the Tyler Formation is truly the “little Bakken,” the oil reserves could be more than currently projected. A news release from Continental Resources Inc., the largest owner of oil-drilling rights in the U.S. Bakken Shale, claims the formation holds 57 percent more crude than previously thought. The company estimates the Bakken Formation holds the equivalent of 903 billion barrels of oil instead of the company’s 2010 estimate of 577 billion. The projected potential of the Bakken was changed after Continental Resources was the first to successfully tap a deeper geological layer of the Three Forks zone, according to the release.