The US went from a country that was heavily dependent on oil imports for its energy to one that will shortly, or has the potential to, become an oil exporter. This happened following a very focused energy development policy which opened up a whole range of new technologies and new resources, such as a previous report on the gasification of lignite in the US.

The ability to access hydrocarbon resources that were previously inaccessible was one of the technologies used to alter the US energy balance. Previously untapped resources were made accessible by technologies such as fracking and when the Irish Tillage and Land Use Society (ITLUS) visited North Dakota last June, we went up to the Bakken oil reserve in the northwest of the state to witness what the new-found oil wealth had done in just one region, Dunn County.

As we travelled north from Dickenson to Manning, Vicky Steiner told us about how local law and controls operate and how the big companies gained access to the Bakken oil resource from the land above and the effect that whole process had on what had been normal rural life.

The Dickenson hub

The town of Dickenson became the southwesterly hub for the development. All the major mining and oil companies moved in over a very short period and the town and region sprung into life. Drilling rigs and oil pump and fracking companies rolled into town and they were quickly followed by people. And because these were potentially well paid jobs, labour became a problem for local businesses and trouble also arrived with the inward migration of labour.

From being a sleepy outback, towns and villages experienced traffic jams and the law enforcement agencies had to become more active. Man camps were erected to provide accommodation for the influx of workers who followed the dollars. The attraction to work day and night brought in drugs and associated consequences. All were completely natural and predictable reactions.

Farmer involvement

Vicky explained that because so much of rural America is farming-based, farming people are very much at the centre of local politics and this can filter up to county and state levels. Daryl Dukart is a farmer in Dunn County and he is also county commissioner.

He explained that in the early days of the development – from 2004 to 2008 – all of this technology was very new and no one really knew how it should best be organised and operated.

Daryl pointed out that at the start there was a well on every section (one square mile) and this required a 7ac to 10ac site for the facility to drill, pump, store, etc. On balance, he said that landowners did okay, or well, from the negotiated access for this site. As the technology developed, they learned that a single bigger site (10 acres) was capable of handling up to 30 wells and this changed how the development proceeded.

It also influenced the visible change to the countryside. And now pipeline systems are being put in place to transport the extracted oil to a processing facility.

Initial sites were negotiated at around $9,000 but more recent business was done at $45,000 for the bigger site. And this payment is not for purchase but rather for a 40- to 45-year lease, thought to be the lifetime of the project. Daryl himself has nine such sites on his 2,000ac farm and he said that farmers now get disturbance money for the pipeline installation, etc, because they are better organised. And while new problems arise, especially with pipelines, Daryl said that the majority of such issues tend to be sorted through negotiation.

Mineral rights

In some instances, landowners still own the mineral rights beneath their land but nowadays most do not. These may have been sold sometime in the past to enable owners to hold on to their land in times of previous troubles.

So if a landowner does not own the mineral rights, he does not get a payment for the oil pumped. But someone will own those rights which are estimated to be worth between 12.5% and 18% of the total revenue. Vicky told me that some local Indian tribes receive up to $7m per month in such revenue.

In terms of the overall project, Daryl commented that environmental protection agencies are generally friendly to the development. However, they cost the county a lot of money in terms of compliance to prevent problems.

The local economy

The altered economic situation has affected the county administration also.

In 2010, farming and retail contributed 49% of the revenue of Dunn County. This had dropped to 24% in 2015 and the pipeline companies contributed 47%. This greatly affects what the county can afford to do in terms of services and infrastructure. And revenue from commercial buildings increased from 3% to 16% in the same period. Obviously, it significantly affected local businesses as demand was increased for virtually everything.

Speaking about the actual drilling process, Dan Brosz, using information from the Department of Mineral resources in North Dakota, said that there were oil reserves in 17 counties in the northwest of the state. In recent years, there were 191 drilling rigs operating in the field but only 27 of these were drilling when we visited last June.

Dan pointed out that fracking wells can be turned on or off very easily and so the operators can decide to pump or not, depending on oil price and production cost.

Dan explained that the centre of the Bakken reserve is about two miles deep and that each new well is drilled vertically for two miles (deep) and then the drill head turns to drill horizontally for two miles. This is a very sophisticated process and the horizontal portion is fitted with a series of individual section controls, about 64 in the two miles Dan said. The final bore of the drill hole is about 8in after reinforcing and the controls enable refracking, which can be done after about three years.

The Bakken is a layer of rock which contains embedded oil particles. When a well is put in place the rock into which the bore is drilled is effectively exploded by using pressure and then a combination of water and sand is forced down into the well and into the resultant cracks to keep them open to allow the oil to seep out.

Indeed, water and sand are both scarce resources in the state and the latter was imported initially from abroad when oil prices were still high. The sale of water has also proved to be a lucrative business for many local providers.

Power for the development is provided from the local grid. The state was always a surplus electricity producer but now the oil business is using all of the surplus power, which was previously exported.

While drilling is quite complex, the whole process is now quite fast and it only takes 13 to 14 days to complete a well.

Parallel horizontal bores are put in every 200m and there is no sign of seepage from one bore to its neighbour.

Dan commented that the current process is only removing 2% to 3% of the oil in a single frack and so the cracking, sand blocking and extraction processes would need to be repeated time and time again. At a two-mile depth, the temperature of the earth could be 260oC to 315oC and this helps to liquidify the oil for extraction.

Development

It is estimated that the development of the full Bakken will take between 55,000 and 65,000 wells and only 13,000 of these have been put in place so far, Dan said. So it will take a long time to develop the whole reserve and progress will be price sensitive.

Dan told us that the expected oil output per well over the three years from a single frack is estimated to be 400,000 to 500,000 barrels (63.5m to 79.5m litres). Multiplied by 60,000 wells and at least 10 different fracks, that’s a lot of oil in this state alone. Oil from the Bakken is relatively pure and requires much less processing than standard crude, which helps to keep down production costs.

  • The arrival of the fracking drive to the Bakken region of North Dakota resulted in a significant benefit to the local economy.
  • General practices and beliefs evolved from the start of the exploration as experience was gained.
  • Oil output from a single well is expected to be as high as 65m to 80m litres in three years.
  • In many instances, landowners were not entitled to the mineral rights for the extracted oil because these rights had been sold at some point in the past.
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