RPT-COLUMN-Is Bakken set to rival Ghawar? John Kemp

Reuters Middle East

LONDON, Nov 9 (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 ().

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.

THREE FORKS FORMATION

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 coloured 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.

CONVENTIONAL VS CONTINUOUS

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 metres, 60-150

degrees centigrade) or gas (anything deeper than 5500 metres,

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.

BAKKEN CHANGES EVERYTHING

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.

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