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May 09, 2012 05:59 PM

Boom: What's In The Ground

Vermillion, SD

There are 6,000 wells and counting in North Dakota. Each drilling rig represents a $10 million gas company gamble. But in North Dakota, the odds of striking oil are a sure thing. Drilling rigs there have nearly a 100 percent success rate.

"There's wells out there that they drilled back in the 1980's," oil company worker Konny Rhone said. "But these Bakken wells produce more oil."

The Bakken formation is two miles below the surface. All the oil makes North Dakota the nation's third largest oil producing state behind Texas and Alaska.  But the 6,000 wells are just the beginning. Oil workers say the final number could top 50,000.

"There was probably 40 trucks, maybe 70 people working totally. Now we must be up to 1,200 employees. I can't even say how many trucks we have right now," Rhone said.

Rhone says by year's end, his company, Power Fuels, will have a 2,000 member well service fleet.

"Do you go where you are almost certain to get a payback on your investment, or do you come today and do wildcatting where you might get payback?" South Dakota State Geologist Derric Iles said.

Iles says that's one reason South Dakota hasn't seen a big production spike. The state produced 1.6 million barrels of oil in 2011. North Dakota's Bakken fields yield that in fewer than three days. All thanks to advances in horizontal drilling, and a chemical and water process commonly called fracking.

"They use fresh water and sand, and they pump it down into the formation.  And they force it into the formation and water comes back," Rhone said.

"There are portions of the state that are under explored. There are others that are just outright unexplored," Iles said.

Part of Iles' job is to get information about the oil in South Dakota's ground to companies who request it. He says South Dakota's Red River rock formation is shallower than those of North Dakota and so rich it produces oil without fracking. But there are other layers too. Iles believes prospectors will come south when they run out of space in North Dakota.

"We will see increased exploration, which will translate into increased development production of oil and gas in South Dakota. But we will never, ever produce it to the extent that North Dakota is," Iles said.

But putting a timeline on that development could be South Dakota's $10 million gamble.

  • Business
  • Gas & Energy
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