In his 2005 State of the State address, US Senator John Hoeven, then North Dakota governor, said the state’s “single greatest challenge is the ability to move power to markets outside of North Dakota.” Although at the time he was referring to the state’s abundance of coal and wind energy and the creation of a transmission agency to manage the use of both, it was in some ways prophetic.

Oil and gas production in the state had yet to take off. According to production statistics maintained by the North Dakota Department of Mineral Resources, a little more than 2,000 b/d of oil were produced from more than 180 wells in the Bakken, Sanish, Three Forks, and Bakken/Three Forks formations in January 2005.

The first commercially successful horizontal well in the sleeping giant that is the Bakken of today had been successfully drilled and fracture-stimulated for the first time just a few months prior to the governor’s address. The explosive growth the state would see did not arrive on its doorstep until 2007, when production began its steady ascent skyward.

In a span of five years the number of North Dakota wells producing from the Bakken, Sanish, Three Forks, and Bakken/Three Forks increased from 433 in November 2007 to 4,910 in November 2012. Oil production during that same time period increased from 29,376 b/d to 669,091 b/d.

The increased production brought with it the need to move energy in its rawest form – crude oil – to markets outside of North Dakota. However, great strides in addressing this challenge have been made, according to the state’s current governor.

“Two years ago pipelines and rail capacities were major barriers to growth in oil and gas production,” said Gov. Jack Dalrymple in his State of the State address on Jan. 8, 2013. “Since 2010 we have more than doubled our pipeline and rail capacity from less than 500,000 barrels of oil per day to 1 million barrels.”

The expansion in capacity has attracted the attention of Delta Airlines. During a January earnings call, the company announced that it would begin receiving its first shipments of Bakken crude to its refinery located in Trainer, Pa., in 1Q 2013.

Understanding of the geology, like pipeline and rail capacity numbers, has increased, and operators have a front row seat from which to view the evolution of the Bakken shale play.

Unlocking the geology

The Bakken-Three Forks petroleum system of the Willis-ton basin was initially discovered in 1951 on North Dakota farmland owned by Henry Bakken. According to a North Dakota Geological Survey report on the history of oil production in the Bakken, first production from the system was from the Antelope field located on the Antelope asymmetric anticline discovered in 1953.

While the Bakken horizontal play began in 2001 with the discovery of the Elm Coulee field in Montana, it really took off in North Dakota. Continental Resources is credited as being the first company to complete the first commercially successful well in the North Dakota Bakken that was both horizontally drilled and fracture-stimulated: the Robert Heuer 1-17R in Divide County in March 2004.

The Bakken formation is Devonian-Mississippian in age and is comprised of a black shale and mixed sandstone/carbonate unit located in the Williston basin. According to an overview of the petroleum geology of the region released by the North Dakota Geological Survey, the Williston basin is a large, roughly circular depression on the North American craton covering several hundred thousand square miles across parts of North and South Dakota, Montana, and the Canadian provinces of Manitoba and Saskatchewan. The Williston basin began to subside during the Ordovician period around 495 million years ago and underwent episodic subsidence throughout the rest of the Phanerozoic eon.

Found at depths of approximately 2,590 m to 3,200 m (8,500 ft to 10,500 ft), the Bakken comprises the upper shale, middle dolomite, and lower shale. The middle dolomite, also known as the Middle Bakken, is the primary oil-bearing zone. Directly below the Bakken lies the Three Forks formation, and together these form the petroleum system with oil-producing rock located between shale layers found approximately 3 km (2 miles) below the surface.

A US Energy Information Administration report said that the Bakken accounted for 90% of North Dakota’s horizontal well oil production volumes in 2010. The state’s industrial commission released a study in January 2013 that said 95% of drilling in North Dakota targets the Bakken and Three Forks formations. The commission also estimated that 6.5 Bbbl of recoverable oil is available in the Bakken and Three Forks formations, with only 244 Mbbl recovered so far.

As the primary oil-bearing zone, the Middle Bakken has been the focus of researchers’ attempts to further understand the formation. For example, the US Geological Survey analyzed 40 Middle Bakken samples. The sandstone samples were collected from drilled cores taken at depths approximately 2,300 m to 3,900 m (7,545 ft to 12,795 ft).

The results, published in a 2013 report, found that the fine-grained sandstone and siltstone in the Middle Bakken experienced “diagenetic modification during their burial history.” The modification occurred before oil was emplaced in the sandstone. Oil that migrated into the reservoirs displaced residual water from the matrix pores and prevented further alteration from taking place. Reservoir porosity of the sandstone and siltstone in the

Middle Bakken is poor, varying from 1% to 16% and averaging about 5%. Under in situ conditions, porosity is as low as 3%. Permeability ranges from about 0 mD to 20 mD and averages 0.04 mD.

According to the report, most oil in the Bakken petroleum system resides in open horizontal fractures. Horizontal fractures form a pervasive network in deeply buried reservoir rocks with high residual oil saturations but are generally absent in shallow buried rocks with little to no residual oil.

A Colorado School of Mines (CSM) study on the Middle Bakken looked at the mechanical properties of the formation in an attempt to answer the question of what role the organic-rich shales play in containing fractures and contributing to oil production.

The study, funded by the US Department of Energy’s National Energy Technology Laboratory, found that the Bakken shales are mature over much of the basin and are still generating oil. Volume increases during maturation by as much as 30% provide the necessary overpressure to allow highly productive wells.

In addition, the study found that reservoirs are present in both the Middle Bakken and Upper Bakken shales and that regional fractures and faults form an orthogonal set with a dominant northeast-southwest direction parallel to horizontal stresses.

Several groups continue to conduct research into the shale play. The Bakken Research Consortium, formed in 2007, is a CSM-based program that was formed to develop best practices for developing Bakken wells. The consortium’s 37 members include Apache, Denbury Resources, and Total.

Operator roundup

Oklahoma-based Continental Resources entered 2013 with a little more than 1.1 million net acres under lease in both North Dakota and Montana. According to the company, which is the Williston basin’s top producer, driller, and leasehold owner, about 54% of its total production in 3Q 2012 came from wells in the North Dakota Bakken. Another 6% of the company’s total production came from its wells in the Montana Bakken. The company’s proved reserves for 2012 in the Bakken totaled 564 MMboe, almost double the proved reserves in the play at year-end 2011.

The company recently completed its first horizontal well to test the third bench of the Three Forks zone. According to IHS Inc., the #3-22H Charlotte, located in McKenzie County, N.D., flowed 953 boe/d at 1,700 psi when tested on a 28/ 64 -in. choke. The well was drilled to 6,500 m (21,324 ft) with a 2,957-m (9,701-ft) lateral section and was completed with a 30-stage fracture stimulation design. According to the company, the well could be the first to establish commercial production in the third bench if it continues to perform in line with its #2-22H Charlotte well located in the second bench.

Whiting Oil & Gas, headquartered in Denver, has 714,567 net acres leased in the Williston basin, mostly in North Dakota and primarily targeting the Middle Bakken and Three Forks formations. In 2011 the company’s Sanish field in Mountrail County, N.D., was its largest producing asset, with its production representing about one-third of company-wide production, according to a company report.

The company recently drilled two exploratory wells on its Big Island prospect in Golden Valley County, N.D. The #23-3 Stecker initially pumped 272 b/d of crude oil and flowed 431 Mcf/d of gas. Production came from two Red River intervals at 3,637 m to 3,652 m (11,934 ft to 11,980 ft) and 3,656 m to 3,674 m (11,996 ft to 12,054 ft). The #13-2 Ross well initially flowed at 306 boe/d from the Red River upper D zone.

At year-end 2012 the company drilled the #44-24TFH Kjelstrup well in the Big Island prospect. The horizontal exploratory test well initially flowed 845 b/d of 38.7°API gravity oil with 233 Mcf/d of gas. Production is from a horizontal Three Forks lateral extension from 3,381 m (11,094 ft) north-northwest to 6,300 m (20,670 ft). The well was tested following a 30-stage fracture stimulation job.

Hess Corp. was the first to discover oil in North Dakota in 1951. Since then, the company has made significant investments in the state to develop its leases, especially in its development of the Bakken shale. Bakken oil and gas production for Hess Corp. was 87% higher in 2012 than in 2011, with drilling and completion costs down by more than 30% during 2012.

In a January conference call with analysts, John B. Hess, chairman and CEO, said North Dakota Bakken net production averaged 56,000 boe/d in 2012 and is likely to average between 64,000 boe/d and 70,000 boe/d in 2013. The company also plans to complete the expansion of its Tioga gas plant, with operations set to begin late in 4Q 2013.

Greg Hill, vice president, director, and president of worldwide E&P for Hess, said in the conference call that part of the drilling cost reduction was accomplished in the first half of 2012 when the company “transitioned from a higher cost 38-stage hybrid completion design to a lower cost sliding-sleeve design. This, along with other efficiency gains, allowed us to drive our drilling and completion costs down by more than 30% over the course of the year.”