Banking on Bakken

The North American Bakken oil field has been reported to contain up to 500 billion barrels of oil. If true, this would be the single largest oil deposit in the world.

Located in the Rocky Mountains on the Montana and North Dakota borders, the Bakken oil field has been extensively studied and extensively promoted as a solution to U.S. energy supply needs.

The spread out nature of the oil in this formation makes recovering it an expensive task. Those areas where there is some pooling of oil have already been drilled and developed and to date 105 million barrels of oil have come from the site. A recent report from the United States Geological Survey (USGS) has predicted that a maximum of 4.3 billion barrels of oil can be extracted from the area using conventional technology. Possible technology developments such as horizontal drilling may increase this somewhat. The figure for the amount of recoverable oil in the Bakken formation contrasts sharply with the amount predicted to be present. In 1999 the USGS estimated the total volume of oil in the formation to be in the range of 413 billion barrels.

What then can we make of the claims that this oil field is the solution to America's oil problems, and that development of this field will hail the return of cheap gasoline in the US?

The 4.3 billion barrels of oil available in this area must be seen in context. The United States presently uses somewhere in the vicinity of 7 billion barrels of oil each year, meaning that all the oil readily able to be extracted from this formation would last the US less than eight months. This is in contrast to Saudi oil production which is over 8 billion barrels a year and will continue to be so for some time.

The remainder of the oil in the formation cannot be accessed without great effort and expense. Due to this it is highly unlikely that the field will be developed in a major way until oil prices are so high and demand is so great that there is no alternative.

Clearly the Bakken oil field does not qualify as "the next oil boom". Caution must be exercised when considering investing any money in projects that make improper use of the USGS reports on this formation's oil bearing capacity.