Many people in the resource industry are eyeing the unique Bakken formation, regarding it as the next big thing. This attention prompted George Media to speak with Ron Ness, president of the North Dakota Petroleum Council, who brought us up to speed on the new technologies, hot topics and regulatory issues. Today we discover how this association has positioned itself for success and what hot topics are on their radar this year.
The North Dakota Petroleum Council (NDPC) represents 185 oil and gas industry members within the state. These range from oil and gas production, refining, pipeline, transportation, mineral leasing and consulting, legal work right through to field service activities. There are over 200 Petroleum Council members, which range from large to regional gas operators to North Dakota oil and gas companies, as well as the service industry that supports its members. “We have a very diverse membership which certainly provides us with a wide range of issues,” Ness says, of the Council, whose members produced 80 percent of the 62 million barrels of oil produced in North Dakota in 2008.
Over the years, the NDPC evolved from a division of the American Petroleum Institute with support from the Rocky Mountain Oil and Gas Association (RMOGA), to the North Dakota Oil and Gas Association (NDOGA), to its present structure as a standalone organization. As the primary voice of the oil and gas industry in the state for nearly 40 years, this trade association has a long history of legislative and regulatory success in North Dakota. This success has led to a favorable business climate for the oil and gas industry, particularly in the Williston Basin.
Luckily, North Dakota was fairly insulated from the economic downturn. There are, of course, still several external factors that the organization continues to deal with such as road safety or pipeline infrastructure issues. “We also do a lot education and training as new issues arise,” Ness explains.
“We continually develop this new resource and it is truly incredible the amount of challenges and opportunities that arise. And that’s truly what our focus has been with the public and policymakers: to find solutions and help our own gas producers meet the needs.”
Strong relationships aid efforts
The organization benefits from strong relations with state legislative staff, which in turn is also incredibly important to its members’ success. “Our primary objective this year as activity begins to increase at a fast pace, is to address new challenges in the middle of a boom; whether that be access to water and other materials for the technology used to hydraulically fracture these Bakken wells, or finding workers and addressing a housing shortage,” Ness outlines.
In order to help address these challenges, NDPC’s has leveraged a partnership with the Canadian province of Saskatchewan. For the past 18 years, this partnership has endured and together, the two regions host an annual Basin Petroleum Conference in May where over 1,500 international attendees gather at the technical forum to share and discuss new drilling techniques. In more recent years, the conference has become a networking opportunity. “That has really become the premier event, in the Northern part of the United States and Canada, for the oil industry,” tells Ness.
Some key issues that will be on the conference agenda are the evolution of the hydraulic and multi-stages used in fracture techniques. “There is a formation below the Bakken, which is called the Three Forks. This formation also holds great potential and that will be a topic of great discussion. What operators are looking for, as they explore into the Three Forks formation is whether in fact, it is a completely separate formation from the Bakken,” explains Ness. Conference attendees will digest the export capacity that is associated with the growing production of oil and gas, the geographical locations that other industry members are looking at, and what type of issues are coming up with those locations.
About the Bakken
Shaped like a big cookie sheet over a large portion of the Williston basin, which runs 26,000 square miles in North Dakota, the Bakken formation is well-known as an anomaly in the industry. As one of the few unconventional shale plays producing oil, it has attracted a lot of attention especially since natural gas prices have been depressed for so long. “It is a thin [formation] but a continuous layer of oil, unlike most oil formations that are trapped in structures that you drill into,” explains Ness.
Although there is a lot of oil in this North American formation, it is difficult and expensive to get out of the ground. “This unconventional shale has been around for millions of years. While the industry has tried to develop this resource, ever since oil was first discovered in North Dakota in 1951, you can never really make it economical. As a result, the development in what we call ‘extended regional horizontal drilling’ over the past decade has generated a lot of interest,” tells Ness. “You’ve got to create these microscopic veins, which allow the oil to flow over that two-mile well, making this prolific resource economical and productive.”
Ness says that the Bakken rock is like a tombstone in terms of its density: “There’s not a lot of veracity in order for the oil to flow like other oil structures across the world,” he explains.
Split-state ownership a challenge
Overall, there are many hot topics that the organization is looking to address, including: revolving around so-called split-state owners in North Dakota. “The major of activity has been on private lands, many of which the private ownership has passed through generations,” Ness says.
“Often times, the owner of the surface does not own the rights to the minerals so then, you have a situation when the mineral state is dominant and the owner has that right to develop the minerals.” Ness adds that the association helps parties draft an agreement to access the minerals.
New technologies reduce environmental impact
Over the years, advances in drilling technology have made incredible strides in environmental impact. “One of the amazing things is that operators have been able to cut their drilling time by half over the past four to six years, that tells you how critical some of these issues are and how they become more efficient and more productive,” says Ness. Despite the many challenges in the industry, there are still 105 rigs operating today. As the association looks forward, workforce and infrastructure are two areas of priority.
North Dakota is proudly open for business and is actively seeking new opportunities. “[In North Dakota], the oil industry is viewed as one that brings great opportunity, tremendous jobs, prosperity to our state and allows us to have budget surpluses, which help fund things like water projects and renewable initiatives; many other states cannot do that right now,” explains Ness. With revenues from oil production and job creation boosting the state, the association will continue to offer education and training as other tremendous challenges and opportunities arise.