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James MacPherson, Associated Press, Published August 17 2012

North Dakota oil drilling more efficient but costlier

BISMARCK – About 35,000 wells have yet to be drilled in western North Dakota’s Oil Patch, and companies increasingly are making inroads with speedier but more costly technology, the state’s top oil regulator said.

Drillers are finishing wells at a rate of eight daily, up from less than one a day five years ago, said Lynn Helms, director of the Department of Mineral Resources.

The time needed to drill a well has dropped by two-thirds since 2007 to 20 days, as the industry continues to fine-tune cutting through dense rock to the oil trapped nearly two miles beneath the surface.

Helms said the “enormous efficiency increase” is due in part to the increased use of diamond-tipped bits and the growing number of so-called walking drill rigs. Those machines are capable of moving between well sites on hydraulic feet without having to be disassembled.

But advances in drilling techniques that have catapulted North Dakota to the nation’s No.2 in oil behind Texas have a price. Helms said a completed well in the Bakken and Three Forks formations costs about $10 million, about double that of a well drilled in 2007.

Helms said most of the additional expense comes during hydraulic fracturing, a process that uses pressurized water, chemicals and grit to break open oil-bearing rock. Competition for hydraulic fracturing crews adds to the cost, as well as an increase in the price of proppants – tiny ceramic particles that prop open rock and provide a pathway for oil to flow.

About 350 wells were awaiting hydraulic fracturing services in June, state records show.

North Dakota drillers produced almost 20 million barrels of oil in June from a record 7,352 wells, said Alison Ritter, a spokeswoman for the department. About 5,560 wells produced

11.5 million barrels in the same month one year ago.

State and industry officials say 99 percent of rigs drilling in the two formations hit oil, while nine of 10 are profitable. A typical well drilled in North Dakota will produce about 540,000 barrels of oil during its 29-year lifespan, state data shows.

Helms has estimated that it will take at least 15 years to complete drilling in the Bakken formation.


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