(John Kemp is a Reuters market analyst. The views expressed are his own)
By John Kemp
LONDON (Reuters) - Could oil production from the Bakken formation in North Dakota and Montana rival output from Saudi Arabia’s supergiant Ghawar oilfield, the greatest oil-bearing structure the world has ever known?
Until recently, comparisons between the shale fields of the Bakken and Ghawar, which produces 5 million barrels per day, would have been dismissed as fanciful.
But Bakken’s exponential growth and enormous reserves put it on course to produce more than 1 million barrels per day by the middle of next year, which will earn it a place in the small pantheon of truly elite oil fields.
Ghawar accounts for nearly half of Saudi Arabia’s total declared capacity of 12.5 million barrels per day and has produced more than 65 billion barrels of oil since 1951.
Ghawar is one of only six super-giant oil fields that have produced more than 1 million barrels per day at their peak. Others are Burgan (Kuwait), Cantarell (Mexico), Daqing (China) and in the 1970s and 1980s Samotlor (Russia) and Kirkuk (Iraq).
Discovered in 1948, and just 174 miles long by no more than 31 miles wide, Ghawar is an extraordinary structure.
“It is unlikely that any new oilfield will ever rival the bounteous production Ghawar has delivered to Saudi Arabia and the international petroleum markets,” energy expert Matthew Simmons explained in “Twilight in the Desert”, his controversial 2005 book about Saudi Arabia’s diminishing oil reserves.
No other super-giant has been discovered in the last 35 years (the last was Cantarell in 1976). Failure to find any more caused Simmons and other experts to worry world oil production was close to peaking in the late 2000s.
THE NEW SUPER-GIANT
But now Bakken has burst onto the scene. Output hit 631,000 barrels per day in August 2012, according to North Dakota’s Department of Mineral Resources, up from 256,000 barrels per day in August 2010 and just 83,000 barrels per day in August 2008.
Growth has been exponential (in the true sense of the word). Output has been increasing at a steady rate of about 65 percent a year since late 2009 and shows no sign of slowing (link.reuters.com/vys83t).
If growth continues at this pace for the next 12 months, and there is no reason to think it won’t, production will top 1 million barrels a day by August 2013.
Some analysts will complain about the comparison. Ghawar is a conventional field: a single, well-defined accumulation of oil. In contrast, the Bakken is a collection of dozens of small fields in an unconventional “continuous-type” deposit without well defined boundaries.
But the two are not so very different in size. Ghawar covers about 2,000 square miles. The core of the Bakken is 15,000 square miles, according to Continental Resources, one of the pioneering exploration and production companies operating in the area. Rough comparisons are reasonable.
Bakken is proving to be one of the most prolific oil-producing patches in the world. It continues to outstrip even the most optimistic forecasts.
At the moment the industry has completed just 5,000 wells in the Bakken at an average spacing of less than 1 well per 1,280-acre unit. But Continental estimates the core could support up to 52,000 wells with four to eight wells per 1,280-acre unit for full development.
Bakken contains about 577 billion barrels of oil and gas, of which about 24 billion barrels should be technically recoverable, according to Continental. But underneath Bakken in the same area is the Three Forks formation, which Continental believes could contain an even greater 900 billion barrels, of which perhaps 32 billion barrels might be technically recoverable.
Continental’s estimates are probably colored by a developer’s natural optimism. But the company has been the leading innovator in what has become North America’s hottest oil play, and it has been proven consistently right.
More conservative estimates still show that the combined resources of the Bakken and Three Forks are enormous.
In a conventional oil or gas system, hydrocarbons are produced in a source rock and migrate through tiny pores or along fault lines before accumulating in a reservoir rock, from which they are produced.
The source rock must have a high proportion of organic material (typically at least 1-3 percent) to generate petroleum. It must be buried to the correct depth and temperature for the organic material to mature into oil (2000-5500 meters, 60-150 degrees centigrade) or gas (anything deeper than 5500 meters, and hotter than 150 degrees).
There must be sufficient cracks or porosity to allow the produced oil and gas to migrate from the source and accumulate in a reservoir rock. And the reservoir must be sealed by a cap to prevent the oil and gas migrating any further, allowing it to accumulate in sufficient concentrations to be extracted profitably.
Source, maturation, migration, reservoir and trap must all come together in exactly the right sequence. If any one of these elements is missing or occurs in the wrong sequence, oil and gas will not accumulate in a discrete pool.
Bakken, Three Forks and other shale plays are what the United States Geological Survey calls “continuous-type” resources.
In these deposits, the oil and gas is extracted direct from a source rock or a much more extensive reservoir rock nearby.
The Bakken, for example, consists of three layers, known as “members”: the upper and lower shales (which are the source of the oil) and a middle sandstone layer (which is the reservoir). Drilling into the shales has been relatively unsuccessful. Most oil is being produced from wells drilled into the middle sandstone member.
The conditions are less demanding for continuous-type resources than for conventional deposits, which is why shale deposits are distributed much more widely around the world.
The problem, until recently, was that oil and gas could not be extracted profitably from continuous-type resources. Horizontal drilling and hydraulic fracturing have changed the situation, unlocking oil and gas from previously inaccessible tight rock formations with low porosity and poor flow rates.
Conventional super-giants such as Ghawar may never be discovered again, although exploration is pushing into new areas offshore and in the Arctic. But that may not matter if oil and gas can be wrung from more commonly occurring continuous deposits.
Bakken has a long way to go before production overtakes Ghawar. But the play has already defied most expectations that it will slow. At the very least, Bakken will join the world’s largest oil-producing zones next year. In the process, it has changed the oil industry forever.
editing by Jane Baird