The Corner

Oil-Peak Bleg

A reader who’s worked in oil exploration:

Have you seen There Will be Blood?  [Me: No]  Remember the line “I drink your milkshake”?  [Me: Uh …]  Well, tapping Bakken is like trying to drink one of those McDonald’s brain-freeze shakes that collapse the straw.  [Me: Clear enough — got it.]

Oil production needs:

  • Source rock — the layer that produces the oil
  • Reservoir rock — the layer where the oil collects, sometimes source and reservoir are the same
  • Cap rock — the layer that kept the oil from bubbling to the surface and oxidizing long ago

See, oil is lighter than the surrounding material, so it wants to exit upwards, like the water in your footprints on the beach. Source rock and Reservoir rock must be permeable; the oil must be able to seep thru it. Cap rock must be impermeable, so that it traps the oil in the Reservoir rock beneath it. Geologists and geophysicists look for places where these rock layers exist in the right order, and the Cap rock is shaped in a way that will trap oil in a concentrated area beneath it. That’s why they drill near faults, or domes, both making good spots for oil to collect.

From what I understand, Bakken has source rock with poor permeability. That means it holds oil, but the oil can’t easily collect / migrate thru the rock. Imagine the difference between using a straw to drink scotch on the rocks, vs. the McDonald’s shake; a really cold one at that.

To get the Bakken oil, they’ll have the drill change direction on the way down so that they pierce at a shallow angle or even horizontal, hitting a lot more of the formation. There’s also additional tricks they can use to increase the flow, such as fracturing the layer, heating it, or steam pressurizing from another hole to drive oil out the tap holes. The extra effort adds to the cost, and the impermeability limits production. Also you have to lease more land because your drill string is traversing more property.

The oil may be there, but it’s not low-hanging fruit.

[Me]  Thank you, Sir. Thanks also to several readers who gave me links to the 4/10/08 release of a USGS study that found 3.0 bbl to 4.3 bbl recoverable with current technology. For scale, the U.S.A. consumes around 7.6 bbl per year, though there are hidden variables in there (it’s not the case that all oil is equal).

One more: here are a bunch of blog posts by Carter Wood, who, he tells me, “used to be a newpaper reporter and policy person in the governor’s office in North Dakota.” Thanks to Carter for those.

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