magazine

Opening Remarks
A Message from the North Dakota Department of
Mineral Resources
Lynn Helms
North Dakota
Department of Mineral Resources
“We’ve reached somewhat of a cruising
altitude in the Bakken, averaging
about 190 rigs, but that doesn’t mean
that there won’t still be turbulence
along the way.
About 15 years ago, when I first
became director of the Oil and
Gas division, Google launched
as a search engine, the United
States announced its first budget
surplus in 30 years, and the average price
for a gallon of gas was $1.15. Two other
major events happened soon after I became
director—a new crop of youngsters entered
kindergarten and the last rig moved out of
North Dakota.
Today, “Google” is used as a verb, there
has been only one federal budget approved
in four years, the average price of gas $3.20,
and North Dakota has about 190 rigs running
every day. Oh, and those kids that entered
kindergarten? Well, they are about to
graduate college, maybe with a degree and
a job that will keep them working in North
Dakota. A lot can happen in 15 years—it is
nearly a generation.
Some things, like rig counts and the prices
at the pump, can change rapidly, making that
time frame seem insignificant. But when you
think of it in terms of generations, it really puts
all of this oil and gas development in our state
into perspective.
We are just beginning an oil play that will
span at least five generations. So, if you have
grandchildren like me, it will be their grandchildren
that will eventually reclaim these well
sites we are building today. We need to ensure
the wheels for proper development are in motion
now, to make final reclamation easier in
the future. We have already started by establishing
energy corridors, and thanks to the
use of multi-well pad drilling, there will be
one-tenth the amount of roads and pipelines
to reclaim. And to date, we have successfully
reclaimed nearly 8,500 legacy wells around the
state, with many lessons learned.
But how did we get to where we are today?
When the last rig left the state in 1999, I spent
time with the Legislature and the Industrial
Commission working to draft emergency rules
to keep the oil and gas industry in sort of a “hibernating”
state until oil prices could rebound
and productivity could resume. Little did we
know that when prices did rebound, we would
experience the Bakken. Fortunately, we had
already experienced something, which seemed
enormous at the time, but was really like a kindergarten
class that prepared us for the Bakken.
Cedar Hills in Bowman County was where
old Red River Formation wells were starting
to decline. When Cedar Hills was developed
using horizontal wells from 1995 to 1998, it
became the largest oilfield discovered in the
United States in 20 years, at 200 square miles.
It made the rig count climb from zero to 20
and improved technology on how wells can be
drilled to extract oil. Sound familiar? The unitization
battle in Cedar Hills took two years, resulting
in the first horizontal well water flood
in the United States, and the first horizontal
well fire flood in the world. Both methods were
successful in extracting otherwise trapped oil.
It pushed the limits on how regulations, development
and communities needed to evolve
in order to keep up with technology. What we
learned from Cedar Hills set the stage for how
Bakken development could, and would, be approached.
In early 2010, the Industrial Commission
took a card from the hand that Cedar Hills
dealt us and standardized spacing for development
across 15,000 square miles of western
North Dakota, essentially creating the world’s
largest oilfield. Horizontal drilling, combined
with hydraulic fracturing and the aforementioned
multi-well pad drilling, created a unique
opportunity to manage such a huge oil play.
Once again, technology drove the need for
regulations, development and communities to
evolve. At the height of development, the rig
count had pushed to 218 by May 2012.
We’ve reached somewhat of a cruising altitude
in the Bakken, averaging about 190 rigs,
but that doesn’t mean that there won’t still be
turbulence along the way. The pace of development
may soon feel like it’s slowed in some
counties, thanks to multi-well pad drilling. In
2013, more than two-thirds of the permits issued
were on multi-well pads, and that number
should continue to rise.
Over the next year, we will begin to move
out of a phase of development that required
2,000 truck trips to a single well in the first
year, and we will move into a phase of development
that will bring about 850 trips to each
additional well. When pipelines are in place,
those truck trips should be reduced to less than
250 per well. However, due to great geology,
McKenzie and Mountrail Counties will still be
the most heavily impacted, even as truck trips
are reduced. We still have a generation of drilling
a head of us, so the sooner we can reduce
truck trips with multi-well pads and pipeline
infrastructure, the better.
Oil production is now an integral part of
everyday life for North Dakota residents, and
it will continue to be for four or more generations.
That means we’re still very early in Bakken
development—you could say we’ve just completed
kindergarten and still have a lot to learn.
To quote Winston Churchill and his reference
Continued on page 29
BASIN BITS | Spring 2014 27