Well Costs at the Bakken Are Declining
The Bakken Shale has been producing oil since 2008. Some 3,000 wells have been drilled and production has risen to 450,000 barrels per day. Throughout the period well cost have been rising, however, and one of the assumptions of Bakken production has been that they would continue to rise and the wells would eventually play out.
Now new technological improvements have reversed this pattern. Over the last year, costs per well have actually declined for the first time, as illustrated in the graph above. Just 100 feet below the primary Bakken formation drillers have now discovered an entirely different reservoir, the Three Forks formation, which is sealed off by a separate layer of shale. Continental Oil has developed a new four-well drilling platform that can access both formations with the same well. Where horizontal drilling techniques formerly allowed operators to access one square mile of reservoir per well, they are now able to extend out for two square miles. This has considerably reduced drilling costs.
Estimates are now that there is room for 48,000 wells in the 8 million acres of he Bakken and that it can eventually produce 24 billion barrels. At the current pace, this would be 1.2 million barrels a day, the current rate form the Gulf of Mexico. But even then, geologists estimate that 90 percent of the oil would be left in place. Further developments such as the injection of carbon dioxide could increase this recovery by orders of magnitude.