On April 30, the United States Geological Survey (USGS) released a new assessment for oil and gas reserves in North Dakota, South Dakota and Montana. The assessment includes new estimates for the Three Forks Formation and updated estimates for the Bakken Formation.
By combining the estimates for Three Forks and Bakken, the USGS found that the region has far greater reserves of oil and natural gas than previously thought. The USGS estimates that the two formations have a total of approximately 7.4 billion barrels of undiscovered, technically recoverable oil, which is twice the amount that was reported in the 2008 assessment.
The recent assessment also found that the Three Forks and Bakken formations have a combined 6.7 trillion cubic feet of natural gas and 0.53 billion barrels of natural gas liquids, representing a threefold increase from 2008 estimates.
The use of hydraulic fracturing and horizontal drilling technologies to extract shale gas and light tight oil has unlocked the productive potential of the Bakken and Three Forks formations. As a result, the USGS has designated the shale gas and light tight oil as “technically recoverable,” meaning they are “producible using currently available technology and industry practices.” Hydraulic fracturing and horizontal drilling have brought about what some are calling an American energy revolution by allowing companies to access unconventional resources, which were previously thought of as unrecoverable.
The true extent of unconventional oil and natural gas reserves in the United States is uncertain, however, because assessments of technically recoverable reserves are far more predictive than they are factual. For example, in January 2012 the U.S. Energy Information Administration (EIA) drastically reduced their estimates of technically recoverable shale gas in the United States. In the 2012 Annual Energy Outlook, the EIA cut its estimates to 482 trillion cubic feet, far lower than the 2011 estimate of 827 trillion cubic feet. This reduction can largely be attributed to a reassessment of the Marcellus shale formation, based on additional drilling and production data. The revised estimate of 141 trillion cubic feet for the Marcellus formation was a 66 percent decline from 2011 numbers.
While tight oil production in the Bakken and Three Forks formations has the potential to upend the global energy order and dramatically reduce U.S. oil imports, the extent of the resource and ultimate production levels in the United States, and subsequent effect on the geopolitics of energy, are by no means a foregone conclusion.
Photo: A drill in the Bakken oil field of North Dakota. Courtesy Stephanie Gaswirth and the USGS.