Norstra Energy, the Montana/Texas-focused oil and gas developer currently occupied with their heavily under-exploited territory in the southern Bakken-Alberta Fairway, reported some great news today out of their South Sun River Bakken Project, as the USGS has officially doubled the reserve estimate for the Bakken-Three Forks formation located in Montana and the Dakotas.
With the latest estimates coming in at a whopping 7.4B bbls of “undiscovered, technically recoverable oil,” we have a solid doubling of the previous value issued in 2008 and a firm confirmation from USGS that the formation is the largest continuous oil formation in the continental U.S. This is superb news for the company’s lease holdings targeting the formation and NORX’s management was eager to have investors take a look at the USGS publication to compare regional coverage.
President and CEO of NORX, Glen Landry, emphasized the recommendations offered by head of geosciences for the University of Houston, Dr. Don Van Nieuwenhuise, and those of associate director for research with the Energy and Environmental Research Center at the University of North Dakota, John Harju, who both see the latest USGS numbers as still being quite conservative. Dr. Nieuwenhuise pointed to the overwhelming fact that the report only looked at “sweet spots” in the formation and, given that the probability of finding more such similarly sweet spots in this massive area is relatively high, the good doctor emphasized that these latest figures should be taken only as a baseline indicator.
Dr. Nieuwenhuise boldly affirmed that every drop cited in the USGS report was there, saying that he was pretty sure developers would get all of the 7.4B bbls, at the very least. A view roundly reinforced by the biggest leaseholder in the region, Continental Resources, which called the figures quite modest and underscored how the USGS is notorious for erring on the side of caution in their estimates. Chairman and CEO of Continental, Harold Hamm, even ventured some figures of his own, offering the best estimates of Continental’s combined knowledge in a May 1st interview with reputed online publication, the Oklahoman-powered (most trusted news in the state) NewsOk, where he projected some 24B bbls of recoverable oil on some 577B bbls in place.
That isn’t just soft talk coming from the biggest player in the region either, as Continental upped their 2012 estimate by as much as 56%, to an astonishing 903B bbls. Harju over at the University of North Dakota seemed to confirm this extrinsically when he called the USGS figure the Williston Basin’s lower limit and urged interested parties to see the projection as a mile marker in the rear-view mirror, since recovery advancements coming down the pipe in the near future will likely shatter the estimate’s ceiling.
Landry reminded investors that a true resource play is always oil in place, as evinced by high resistivity on their Krone and Steinback wells, cited during the May 7 update offered to the Fairfield Sun Times on the company’s South Sun River Bakken Project. Significant gas spikes on the mudlogs reinforce this analysis and the company looks to have a low risk blanket target in the Bakken on their hands, while still having that deeper wildcat potential in the sub-Bakken range drilled by majors like Arco and Exxon back in the 80’s.
In fact, the target zone is likely overpressure according to Landry, a geologist with a great deal of experience in the region/formation. Landry explained that when you get oil migration and flushing through a naturally fractured play, as opposed to sealed oil in place, as appears to be the case here (target trapped between thrust sheets), the risk is much greater and the returns less sustained. Landry further indicated that a successful horizontal Bakken should have no such fractures and that NORX would be doing their own middle-member fracturing down the road here.
For more info, please visit www.NorstraEnergy.com
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