Clastic Detritus

UPDATE (July 2008): To learn more about the geology of the Bakken petroleum system, check out this study by Flannery and Kraus from 2006.

UPDATE (June 2008): I have edited the text from the original version of this post in April 2008. I incorrectly used the word “reserves” when I should’ve been using “resources”. In addition to that, I was using them inconsistently! My bad … thanks SF!

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Reports, blurbs, and blog posts related to a USGS assessment of the petroleum resources of the Bakken Formation (Williston Basin, Montana and North Dakota) motivated me to look at the report in a little more detail.

Now, whether or not the resources should be developed is a question I’ll come to at the end of the post. I think, regardless of how you might answer that question, it is important for an entity like the USGS (as opposed to the private sector) to carry out these assessments. More knowledge is beneficial for making decisions.

The USGS puts together these great summaries, called “fact sheets”, for a lot of the work they do. Having done some work with the USGS myself, I found myself going back to their fact sheets for other topics over and over again. I’m sure one can nit-pick and find problems with them … blah blah blah … but, for a high-level overview, these are fantastic. You can find and download the PDF for the fact sheet for the Bakken resource assessment here. Much of what I outline below comes directly from that summary.

The map below shows the area of interest. The red line is the approximate boundary of the Williston Basin province, and the blue line is the boundary of the USGS’s total petroleum system (TPS) assessment.

What does total petroleum system mean? To accurately assess petroleum resources, three general aspects must be considered: (1) source rock, (2) reservoir rock, and (3) trap formation/timing.

The shales of the Bakken (Upper Devonian-Lower Mississippian) are already known to be a source rock for younger reservoir intervals in the Williston Basin. In terms of reservoir, the Bakken has a middle sandstone member that is thought to be widespread and a good candidate for a conventional reservoir unit.

Now, here is the crucial part of all this. This report concludes with some rather large numbers of recoverable resources – greater than 3.6 billion barrels of oil. Below is the summary table for these numbers. The total undiscovered resources is at the bottom right.

There are two types of resources reported here – continuous and conventional. Note that the conventional resources are a mere 4 million barrels, or 0.001% of the total reported undiscovered resources (I’ve circled it in red above).

Conventional resources are those that we can recover with existing drilling and production technologies and within the general current economic state. Continuous resources (which are sometimes grouped into the “unconventional” category by other assessments) are a different story.

So, then what exactly are “continuous” resources? This USGS site states:

The U.S. Geological Survey has defined a new type of hydrocarbon accumulation which is not trapped in the conventional sense because the accumulation is not significantly affected by the water column. These unconventional accumulations are areally large and are termed continuous because the reservoir rock is charged with oil or gas throughout. Many examples of continuous accumulations can be found in the United States. In conducting the 1995 National Assessment of Oil and Gas Resources, U.S. Geological Survey scientists included this new category of accumulation because of the large quantities of technically recoverable hydrocarbons, mostly gas.

The resources are technically recoverable in the sense that we could extract them if really wanted to. This is an extremely important distinction between what is economically recoverable. In other words, even though one could technically recover the oil, if the cost to recover it was far greater than what one could get when they sell it on the market, what’s the point. It’s uneconomic.

So, while quantifying unconventional resources is certainly important for getting a handle on what’s down there, they can be a bit misleading when reported in the mainstream media. The big wildcard in unconventional petroleum resources is, of course, the price of oil. As the price of oil goes up (increasing global demand + diminishing supply), the economics of recovering these unconventional resources starts to work out.

Personally, I think it’s important to acquire knowledge about such unconventional petroleum resources, but I don’t think we ought to focus our efforts on developing technologies that extract such resources at lower costs (thus making the economics work better).

Do we need petroleum? Yes, indeed. Are we going to need it for some time to come? Yes again. Anyone who thinks the world can operate as it is now without it is out to lunch. Of course, this doesn’t mean we don’t work hard to get ourselves off the stuff. I really despise false dichotomies in general and the one that arises in the energy debate is no oil vs. only oil. The former is unrealistic and the latter lacks vision and is typically driven by power/greed. Admittedly, the ‘we-need-to-get-off-of-all-oil-today’ argument may help to drive public opinion and attitude … I can appreciate that. But, when it comes down to actually making progress regarding energy solutions, we need practical solutions in addition to opinion and attitude. On the flip side, those who are constantly claiming how little alternative energy solutions make up our overall energy portfolio, as if that proves that it’s unimportant and we shouldn’t pursue it, are disingenuous at best.

So, should we start putting all our efforts to recover this resource? Personally, I would say no … at least, not yet. But, that’s just my own opinion. When I was doing a bit of web research for this post, I found myself on some right-wing blogs that were talking about how these resources would solve all our energy problems. This is a very weird thing to say, especially coming from people claiming to be free marketeers. Just because the petroleum is within the U.S., doesn’t mean it’s ours. We don’t have a nationalized oil company*. Companies that extract it, need to sell it on the market. It’s a commodity. The only oil that is truly nationalized is the Strategic Petroleum Reserve (SPR). All this rhetoric about “our” oil (this goes for ANWR and the OCS too) implies a completely different commercial model. Are those people advocating nationalization of America’s resource?

My main point here is to be aware of the different categories of resources that you might see reported in the media. Big numbers will be thrown around and hyped and it’s important to realize exactly where they come from and how they were determined.

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* By the way … a little factoid for you – less than 10% of all the worlds oil production comes from the major international oil companies … the rest comes from the numerous national oil companies around the world [link].