Last week when we wrote about the power of innovation to both develop new technologies and transform existing ones, we described a brand-new technology for making ethanol. Along those same lines, this week we bring you an example out of North Dakota of how everything old in the oil industry is new again.
North Dakota’s Bakken Formation was identified as an oil-rich site more than 50 years ago, but in the decades since has also been largely dismissed as an example of unreachable oil. The site’s recoverable reserves were believed to be much smaller than the total amount of oil in the shale, because so much of it was trapped in rock.
Fast forward to this year, and there’s a bit of a drilling boom in and around Bakken. The Wall Street Journal recently reported that “technological improvements in the past two years have taken what was once a small, marginally profitable field and turned it into one of the fastest-growing oil producing areas in the country.”
That’s right: An oil boom in Fargo country. Thanks to surging production in the Bakken Formation, North Dakota is now the country’s fourth-largest oil producer, after Alaska, Texas and California. North Dakota’s rig count is now the highest it has been in three decades.
The recent success of the Bakken Formation does not reflect erroneous initial estimates, but rather a steady improvement in the technology used to produce oil in shale. Horizontal drilling lets producers vastly improve yields from a single well so that they can save the cost and the environmental impact of drilling multiple holes. In recent years, this technology has been steadily refined. Even before the recent boom in North Dakota, geologists had started to recognize that the site showed significant promise. Two years ago, the U.S. Geological Survey issued a statement estimating that the recoverable oil in the Bakken Formation was 25 times greater than what was believed in 1995.
And as much as this turnaround has been a boom to North Dakota, creating jobs and even construction of a rail line to transport the oil, it is not an isolated story. Some experts believe the Bakken Formation stretches to Montana and southern Canada. They also say that there are similar formations in many other states from California to Colorado and Texas.
The term “game changer” gets thrown around a lot these days, but the story of Bakken goes to show that there are real game changing discoveries and innovations out there in the mature, but still vibrant oil industry.