New Technology Produces New Opportunities And Pipeline Challenges

May 2011, Vol. 238 No. 5

Douglas Lee, PE, and Mark Luther, Kadrmas, Lee & Jackson

The Bakken, one of the best-known oil producing shale plays in North America, is responsible for a renaissance on the Northern Great Plains as oil prices stay above $100 per barrel and significantly increased oil and gas production brings record-breaking levels of wealth and investment into the region.

Increased oil and gas production is occurring as a direct result of new and technologically advanced well drilling and completion methods. Geologic formations (such as hydrocarbon rich shale source rocks) in numerous sedimentary basins in the region are now giving up oil and gas in prodigious quantities from rock once thought too “tight” or impermeable to produce commercial quantities of hydrocarbons.

The drilling of multiple wells from single drilling pads, long leg (up to two miles) horizontal drilling, and the use of multi-stage hydraulic fracturing (fracking) in well completion allow companies to mine oil that was long known to exist, but thought impossible to produce.

The Bakken Formation exists throughout the central portions of the Williston Basin (Figure 1) in North Dakota, Montana and Canada. Beginning about the middle of the last decade, production from the Bakken alone reversed decades of declining oil production in North Dakota and Montana and is responsible for setting all-time production records in North Dakota. Prior to the Bakken play, North Dakota was the ninth-ranked oil producing state in the U.S. It has now moved to fourth in U.S. oil production. An adjacent underlying shale-rich formation, the Three Forks Formation, is also producing large quantities of oil and gas unlocked by the new drilling and completion methods.

Currently most of the Bakken play is in the North Dakota portion of the Williston Basin. Annual crude oil production in North Dakota has grown from less than 30 million barrels in 2003 to more than 113 million barrels in 2010. Natural gas production has increased from approximately 60 million Mcf/yr to greater than 110 million Mcf/yr during that same time frame. With ever-improving drilling and completion techniques, as well as tens-of-thousands of acres yet to be drilled, numerous governmental and industry reports indicate the potential to double oil production from the Bakken during the next five years.

As illustrated in Figure 2, the production potential of individual wells, the areal extent of potential production (trap size), and the spacing of individual wells are depicted in this idealized comparison of conventional oil traps versus the recent and ongoing unconventional source rock plays. Typically, conventional oil and gas traps have initially been harder to locate. However, once discovered and defined, they have been more straightforward to produce since they generally hold very mobile hydrocarbons that have migrated from source rocks to the geologic structure or stratigraphic trap that blocked further hydrocarbon movement.

Figure 2: Illustration comparing conventional type oil and gas traps with unconventional traps now being tapped utilizing horizontal drilling and hydro-fracing (fracturing) techniques (Modified from USGS Bakken presentation).

Historically, most of the production from these conventional types of traps has been based on the use of vertical wells, with spacing of wells based on a variety of factors related to existing natural reservoir porosity and permeability. The spacing of vertical wells producing from a conventional trap in the Williston Basin (Figure 3) requires a significant number of wells to produce the recoverable quantities of oil and gas found there. This is generally due to the limited area of reservoir that each well can drain, with well spacing sometimes varying widely depending on natural porosity and permeability found in the reservoir rocks. The areal extent of the field itself is generally limited and boundaries for commercial production are well defined.

Figure 3: Four-square-mile area with traditional vertical oil well spacing from a conventional North Dakota Oil Field (Source: NDIC DMR).

Compare the well spacing from the conventional trap to a similar-sized area in the Bakken unconventional trap play (Figure 4). Whereas traditional, conventional well spacing has been controlled by existing reservoir rock conditions, new unconventional continuous and/or source rock plays use advanced well drilling and completion technologies to create their own reservoir rock conditions. Porosity and permeability is intentionally created in tight source rocks (shales) adjacent to long horizontal wells through the use of multi-stage hydro-fracturing. Well completion using multi-stage hydro-fracing is a very intentional and engineered process that liberates locked up oil and gas, allowing production companies to create a commercial reservoir where formerly there would not have been one.

Figure 4: Horizontal oil well spacing in an unconventional, continuous source (Bakken Formation) in a North Dakota oil field (Source: NDIC DMR).

Comparing the conventional versus unconventional oil fields provides insight on changes required regarding oil and gas gathering systems in unconventional plays. Whereas conventional plays generally consist of smaller, well defined fields with numerous smaller production wells, the current unconventional plays such as the Bakken may cover hundreds of square miles with a relatively low number of highly productive wells. It is common for many of these wells to initially produce at greater than 2,000 bpd rates and to also produce large quantities of methane and natural gas liquids (NGLs) (Figure 5). While it is relatively straightforward to store and transport the high-value oil coming from these prolific wells, gathering all associated low value gas produced from such widely dispersed wells is proving to be an economic and infrastructure challenge.

With North Dakota’s tremendous natural resources including oil, gas, coal, and wind (North Dakota is ranked first in wind generation potential), low population density, little manufacturing, and low energy consumption in the Northern Plains region, the state has historically exported the bulk of its energy production to other regions of the U.S. Recent increases in all types of energy production – especially oil, gas, and wind generated electricity – leaves North Dakota with a great need to increase infrastructure required to match export capacity with production.

Although the state can meet export requirements with existing pipelines, rail transportation and trucking, needs are projected to increase dramatically. Gas processing plants, additional refinery capacity, pipelines, compressor stations, rail-loading facilities, well pads, new roads and housing for the influx of workers are all requirements that will need to be met before fully and efficiently utilizing this tremendous set of resources for the benefit of the region and country.

With nonconventional oil fields, rapid drilling, more efficient completion techniques, high success rates and the use of a single pad for the drilling of multiple wells, reduced amounts of gathering pipeline are necessary to gather oil and gas from the fields. However, the gap in meeting production export needs has driven several companies to investigate additional transmission pipeline facilities to meet these projected needs: Enbridge Bakken Expansion Program, TransCanada Keystone XL Marketlink, Quintana Bakken Link, Plains Bakken North, Mandan Refinary and True Co.’s Baker 300. Rail facilities will also be expanded to increase capacity for rail exports.

Other Hydrocarbon Transportation
Proposed projects will address most crude oil issues, but fall short on transporting the remaining products (methane and NGLs) to markets. North Dakota has a broad network of natural gas transmission pipelines. However, lack of gathering pipelines present a larger challenge for the state and disadvantage for the nation. The Alliance and Pecan pipelines are the only two primary transmission lines moving wet gas to market. The need is partially offset by the growing number of gas processing plants in North Dakota allowing for rail and truck shipment of some NGLs.

Natural gas gathering system expansion is unable to keep up with rapidly rising rig counts leading to the flaring of large amounts of what is often considered an unwanted byproduct of oil production (Figure 5). While mining for natural gas continues across the U.S., companies are missing out on opportunities to capture and transport natural gas already being produced at high levels. Low market value, high infrastructure costs, and state regulations keep many companies flaring natural gas rather then moving it to market. In 2010, North Dakota oil drillers burned approximately one-fourth of the natural gas extracted, which is more than a 13% increase from 2009.

Drillers are allowed to flare gas tax-free for a period of one year before they must begin paying taxes equal to if they had marketed the product. Flaring is under criticism for potential environmental damage and future state regulations could reduce the amount companies are able to flare forcing companies to face steep tax bills or pay for additional infrastructure.

Figure 5: North Dakota natural gas overall production and breakdown by amount marketed and flared (adjusted to reflect actual minus inert materials) (Source: ND Pipeline Authority).

As exploration continues, the use of unconventional drilling and completion techniques as well as rising oil and gas prices and various governmental policies will drive the development of other shale-bearing major sedimentary basins in the region (Figure 1). Although many of the shales in the regions do not necessarily have a history of commercial production, new technologies are a fundamental game changer capable of turning previously ignored geologic formations into highly sought-after targets for production.

Evidence of interest in pursuing similar shale plays is increasing rapidly – especially in places like the Denver-Julesburg Basin – where many companies are actively leasing acres and drilling various shale formations – especially the Niobrara Formation. As additional unconventional plays are developed, export capacity needs will be greatly magnified in all basins and the Northern Great Plains in general.

Multi-stage hydraulic fracing and horizontal drilling techniques are anticipated to drive strong oil and gas production in the Bakken and Three Forks shale plays in the Williston Basin for the next 20-30 years. As these “game- changing” technologies are employed in other shale plays and basins in the region, the associated dramatic increases in hydrocarbon production will potentially put a strain on both existing and currently planned pipeline systems. Current infrastructure needs must expand to meet future increased exports of highly desirable energy products from the production areas of the Northern Great Plains to the distant consumer markets of the U.S. The opportunity for greater economic and energy security that is now at hand is a win–win for both the region and the country. Contact URL:

Douglas Lee
, PE, and Mark Luther are with Kadrmas, Lee & Jackson, an engineering, surveying and planning firm providing a broad range of services throughout the plains region and across the U.S. Kadrmas, Lee & Jackson has been involved in oil and gas development since the first rig went into the Williston Basin in 1951. Over the past six decades, they have been involved in almost every aspect of engineering, surveying and construction management in the Williston Basin and are currently targeting other basins including the Alberta Basin, Powder River Basin, and Denver-Julesberg Basin.

Douglas Lee, PE, is a senior pipeline engineer with 25 years experience in the pipeline industry. He has worked in conjunction with multiple oil and gas companies to develop thousands of miles of pipeline for gathering systems, transmission systems and distribution systems for natural gas and transmission pipelines including pump station design and construction for natural gas liquids.

Mark Luther, geologist, holds a BS degree in geology from Idaho State University and an MA in geology from the University of North Dakota where he completed his thesis and several published works on the geologic study of a Williston Basin oilfield. Much of his career has focused on both conventional and renewable energy.

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