As rule, I do not publish much from Cybercast News Service, because they are a Conservative Propaganda outfit, and not a hard news organization. But I thought this one was quite interesting.
Because I blog about Conservative-related issues, I am signed up with NewsMax, which is owned by Conservative tycoon, Rupert Murdoch. I was constantly getting these advertisements for some big oil in Montana and North Dakota that was worth investing into.
Reports circulating on the Internet tell of an oil field spanning parts of western North Dakota and eastern Montana where 400 billion barrels of oil supposedly are just waiting to be tapped. However, the U.S. Geological Survey (USGS) tells Cybercast News Service that those huge estimates are "a myth."
A USGS report issued in April estimates that there are between 3 billion to 4.3 billion barrels of oil in what is referred to as "the Bakken Formation" — well below the 400 billion barrels discussed on the Web, but up from the previous estimate of 151 million barrels made in 1995.
Richard Pollastro, Bakken Formation task leader at the USGS, said the myth stems from a 1999 draft report — never published — by a now-deceased USGS employee, Leigh Price. Price estimated that the Bakken Formation holds up to 400 billion barrels of oil. To put that in perspective, Saudi Arabia, the world’s largest oil producer, has about 260 billion barrels of known oil reserves.
Price, however, died in 2000, before his study could be peer-reviewed and published, and the Bakken Formation became the fool’s gold of the oil industry.
"Unfortunately, in many instances, we are still trying to explain and defend our assessment versus the inappropriate and irresponsible posting of Dr. Price’s ‘draft report,’" Pollastro told Cybercast News Service.
According to Jonathon Kolak, a USGS scientist and information specialist, the discrepancy between Price’s 1999 estimates and the agency’s 2008 findings arises from the fact that Price was trying to assess the "oil generation potential" of the oil found in the pores of rocks and shale in the Bakken field, as well as the total content of how much oil might be pooling up – or "oil in place."
"What Dr. Price was looking at was ‘oil generation potential,’ and then, from that, trying to make an estimate of ‘oil in place,’" said Kolak. "Those terms are very distinct from ‘undiscovered technically recoverable resources.’"
The latest study, which was commissioned by U.S. Sen. Byron Dorgan (D-N.D.), is an estimate of how much "technically recoverable" oil and gas is available — i.e, how much oil can actually be recovered using today’s technology.
Kolak also explained that the 25-fold increase between the 1995 estimates and the 2008 assessment is due to two factors: an improved understanding of the geology and advances in drilling technology.
"Our understanding of the geology improved significantly because of the time difference between the studies," he said. "There has been some drilling since then, there has been a lot more information that has come out, other people have conducted studies, and also USGS researchers have conducted studies."
Moreover, drillers are utilizing directional drilling in the Bakken fields, a way of drilling at an angle to tap previously unrecoverable reservoirs.
"If you’ve been out to western North Dakota, you don’t need a USGS report to know that there’s oil there because you can see from all the drilling activity that there’s a lot of energy development going on in western North Dakota," Dorgan spokesman Justin Kitch told Cybercast News Service .
Kitch admits that comparing Price’s 1999 study to the April USGS study is like comparing "apples and oranges."
"But certainly it’s nice to have an up-to-date assessment of the amount of oil that’s technically recoverable in the Bakken," he said.
In 2006, Marathon Oil bought 200,000 acres in the Bakken to drill over 300 wells. This past May, after the report was released, Texas-based XTO Energy bought 352,000 net acres in the Bakken Shale for $1.9 billion.
The federal government, meanwhile, said only a small proportion of the oil available with today’s technology is economically viable for recovery.
"If you’re drilling the Bakken, it’s pretty easy to drill somewhere in there and at least see some oil, but the question is: Is there enough there to get out and actually be economically recoverable?" Kolak asked.
At the end of 2007, about 105 million barrels of oil had been produced from the Bakken Formation.
The USGS, meanwhile, considers any release or dissemination of Price’s unpublished report to be "inappropriate and irresponsible."
Glad I did not invest it that little pipedream, and I’d bet there are some pretty ticked off investors right now.
