Petroleum is an integral part of the North Dakota energy picture. In 2012 North Dakota surpassed both California and Alaska to become the second largest oil producing state, behind only Texas. North Dakota is also a significant point of entry for Canadian crude oil traveling by pipeline to markets in the Midwest. December 2014 was the all-time high in production numbers with 38.0 million barrels of oil, averaging 1,227,344 barrels of oil per day. Natural gas production that same month was 46,763,810 MCF, averaging 1,508,510 MCF/day, also all-time high production figures.
Average rig count over the year of 2014 was 190 rigs. Drilling rig counts in 2014 have remained fairly steady, ranging from a peak of 195 in September to 181 in December. More than 95 percent of drilling takes place in the Bakken and Three Forks formations. The Bakken Formation (the largest continuous oil deposit in the nation) is responsible for more the vast majority North Dakota’s oil production. As of December 2014 there were 12,124 producing wells, with more than half of those in the Bakken Formation. This represents a 21 percent increase over the December 2013 total.
Leasing activity for new drilling sites continues to be very low in North Dakota, consisting mostly of renewals and top leases in the Bakken-Three Forks area, as multiple wells are being added to existing drill pads. Six or more horizontally drilled wells can be placed on one existing pad and as many as 28 wells on some pads.
For more information on Natural Gas processing, visit the Great Plains Energy Corridor Natural Gas info page.
North Dakota is home to one oil refinery located in Mandan near the banks of the Missouri River. The Tesoro Refinery has a crude oil capacity of 71,000 barrels per day (bpd). Feedstock sources include sweet domestic crude oil from the Williston Basin which is refined to produce gasoline, diesel fuel, jet fuel and other products.
Refinery products are sold into the marketplace via truck, rail and pipeline. The Tesoro refinery employs an estimated 250 full-time workers in the Bismarck-Mandan area and more than 100 employees in western North Dakota and eastern Montana with the Tesoro High Plains Crude pipeline system. Tesoro estimates that the Mandan refinery generates $22 million annually in wages and property taxes in North Dakota.
Dakota Prairie Refining, the first Greenfield diesel refinery to be built in the U.S. since the late 1970s, went online in 2015. Located near Dickinson, N.D., the refinery will process more than 20,000 barrels per day of Bakken crude oil into diesel fuel and other petrochemical components. The diesel fuel will be marketed within North Dakota while the other components will be shipped out to other refineries for further processing. The facility is owned by WBI Energy (an MDU Resources Group subsidiary) and Indiana-based Calumet Specialty Products Partners.
The Bakken shale play was previously undeveloped because conventional drilling methods were not able to access the trapped oil and gas. Technological advances, including horizontal drilling and the process of hydraulic fracturing have made it possible for companies to economically drill for oil in the Bakken Formation.
Horizontal drilling allows companies to drill down two miles to the Bakken formation, turn at a 90-degree angle and drill horizontally for as far as four miles. In North Dakota, the typical horizontal leg is two miles.
With horizontal drilling, operators are able to drill more wells from a single location, thereby accessing more of the oil and gas resources in the Bakken while using as much as 90 percent less surface area than with traditional vertical drilling.
Hydraulic fracturing (also called “fracking”) is a process that pumps a specially blended liquid into a well under high pressure, creating fractures in the underground rock to allow the flow and recovery of oil and natural gas.
The fluid used in the hydraulic fracturing process is 98 to 99.5 percent water and sand mixture. A variety of chemical additives are used, depending on the well conditions, to limit the growth of bacteria, prevent corrosion of well casing, and to increase efficiencies.
The additives that companies use are disclosed via FracFocus.org, a website that provides public access to reported chemicals used in fracking and to provide factual information on the fracking process. North Dakota is one of 16 states that require chemical disclosure via FracFocus.