The Bakken Formation Oil email

There is a new email circulating claiming that if we'd just drill for oil in the Bakken Formation, we could have inexpensive gas and could free ourselves from dependence on foreign oil. I was asked for my take on the email, so here is my evaluation. As always with this type email, the conclusion turns out to be wrong, but this one is different because some of the data cited are actually connected with the real world.

The Bakken Formation is part of the Williston Basin Province. For a good short introduction, see the USGS Fact Sheet: Assessment of Undiscovered Oil Resources in the Devonian-Mississippian Bakken Formation, Williston Basin Province, Montana and North Dakota, 2008. Note that while some of the oil is conventional, the Bakken Formation is largely a continuous source. This means special techniques such as hydraulic fracturing are required to extract this oil. It isn't the conventional "drill a hole and start pumping" sort of source.

The current best estimate of the Bakken Formation is that it contains 3.65 (between 3.0 and 4.3) billion barrels of "undiscovered, technically recoverable oil." As exploration continues, the estimate for undiscovered, technically recoverable oil will be replaced with an estimate of proven reserves. Both figures are typically significantly lower than (<1/10) the estimate of in place oil, but as we'll see, this email constantly confuses these numbers.

Here is the quoted email along with my notes and corrections:

From: Jack ...
To: ...
Sent: Sun, Sep 25, 2011 1:53 pm
Subject: OIL- You better be sitting down when you read this !!!!!!

How many of you can I talk into calling your state senator/representative and suggest that they curtain the tree huggers and get folks working producing oil. Jack

OIL - You better be sitting down when you read this !!!!!! EVERYTHING HERE CAN BE VERIFIED: SEE THE LINKS AT THE BOTTOM OF THIS MESSAGE.

Ah, linking to sources to provide credibility. As we'll see, this is only prima facie credibility, checking the sources changes the conclusion.

As you may know, Cruz Construction started a division in North Dakota just 6 months ago.

Cruz Construction is an oilfield services company. It appears that this email may have started as a Cruz Construction marketing message, but if not, it is at least free advertising.

They send every Kenworth (9 trucks) we had here in Alaska to North Dakota and several drivers.

They just bought two new Kenworth's to add to that fleet; one being a Tri Drive tractor and a new 65 ton lowboy to go with it.

They also bought two new cranes (one crawler & one rubber tired) for that division.

Dave Cruz said they have moved more rigs in the last 6 months in ND than Cruz Construction moved in Alaska in the last 6 years.

This is all irrelevant to the message.

Williston is like a gold rush town; they moved one of our 40 man camps down there since there are no rooms available.

Wait, "gold rush town" is a positive term?

Unemployment in ND is the lowest in the nation at 3.4 percent last I checked.

The unemployment for North Dakota is 3.5%, for the entire US it is currently 9.1. This is irrelevant, but true. ND unemployment rate is increasing.

See anything in the national news about how the oil industry is fueling North Dakota's economy?

No, but this is because news means something changed.

Here's an astonishing read. Important and verifiable information:

About 6 months ago, the writer was watching a news program on oil and one of the Forbes Bros. was the guest.

The host said to Forbes, "I am going to ask you a direct question and I would like a direct answer;

how much oil does the U.S. have in the ground?" Forbes did not miss a beat, he said, "more than all the Middle East put together."

The story is irrelevant and unsourced, but the claim about US versus Middle East oil is important to check. The numbers we need are easy to find:

The USA has ~20.68 billion barrels of proven oil reserves.

The Middle East has ~753.36 billion barrels of proven oil reserves.

This means that the Middle East has over 36 times the proven oil reserves as the USA.

The U. S... Geological Service issued a report in April 2008 that only scientists and oil men knew was coming, but man was it big.

It was a revised report (hadn't been updated since 1995) on how much oil was in this area of the western 2/3 of North Dakota, western South Dakota, and extreme eastern Montana.

The USGS press release is real, but the way it is reported in this email is misleading.

Even if it is true that only these groups knew it was coming, this is irrelevant; are the ones who knew it was coming because they are the ones paying attention. The way this is stated it is meant to sound like the report was way out of date, but this isn't accurate. Rocks aren't exactly fast changing, so these studies don't need to be updated often. The change in the estimate is due to the improved models and more advanced extraction techniques.

Check THIS out:

The Bakken is the largest domestic oil discovery since Alaska's Prudhoe Bay, and has the potential to eliminate all American dependence on foreign oil. The Energy Information Administration (EIA) estimates it at 503 billion barrels. Even if just 10% of the oil is recoverable (5 billion barrels), at $107 a barrel, we're looking at a resource base worth more than $5.3 trillion.

This paragraph has a number of problems:

We have been drilling Bakken since the 1950s, but drilling has recently increased. The Prudhoe Bay field was actually discovered in 1968, years after parts of Bakken were already producing.

I traced the 503 billion barrel estimate to a draft study by the late Leigh Price, who was a USGS organic geochemist. The study was never completed, but the draft was made available by the University of North Dakota's Energy & Environmental Research Center. The study was clearly in draft state, with the estimates variously reported as 200--400 and 271--503 billion barrels. It is important to note that this is an estimate for the quantity of oil in place. This does not mean the amount recoverable, which is much lower. The current EIA Annual Energy Outlook estimate for unconventional oil fields is that 8% will be recoverable.

This email estimates 10% recoverable, or 50 billion barrels. Notice the factor of 10 error stating that 5 billion barrels (1%) will be recoverable. Using the 50 billion barrels number this puts the oil at $5.4 trillion, using the 5 billion barrels number in the email puts this at $540 billion. Using the current best estimate for a maximum of 4.3 billion barrels extractable, the maximum recoverable value of the Bakken oil is $500 billion.

Even the high estimate for total North American proved oil reserves is lower than than this email's estimate for the amount extractable from the Bakken Formations.

"When I first briefed legislators on this, you could practically see their jaws hit the floor.

They had no idea...” says Terry Johnson, the Montana Legislature's financial analyst.

"This sizable find is now the highest-producing onshore oil field found in the past 56 years," reports The Pittsburgh Post Gazette.

It's a formation known as the Williston Basin, but is more commonly referred to as the 'Bakken.'

It stretches from Northern Montana, through North Dakota and into Canada.

The reaction of politicians to this news is irrelevant.

For years, U. S. oil exploration has been considered a dead end.

Even the 'Big Oil' companies gave up searching for major oil wells decades ago.

However, a recent technological breakthrough has opened up the Bakken’s massive reserves,

and we now have access of up to 500 billion barrels. And because this is light, sweet oil,

those billions of barrels will cost Americans just $16 PER BARREL !!!!!!

As I've already shown, the 500 billion barrels is a significant overstatement of the recoverable oil in the Bakken Formation.

I don't know where the $16/barrel cost came from, but it is an extremely optimistic number. The extraction of oil from the Bakken Formation has increased as higher prices support more expensive extraction techniques, so expecting this oil to be extracted at $16/barrel is unrealistic. Additionally, this ignores the fact that oil is sold on a world market.

That's enough crude to fully fuel the American economy for 2041 years straight.

Using the current rate of petroleum product consumption in the US (with no growth), the Bakken Formation would supply the US for less than one year. That's a long way from 2041 years. The email is internally inconsistent with numbers, but if I'm generous and say it means 30 years, it is still off in US oil consumption by a minimum of either 4.2 or 42 times. That is, the email claims that USA uses either 24% to 2.4% of the oil we actually do. If we only used 24% of the petroleum that we actually do, we could stop importing oil and our domestic supplies would last twice as long. That's a reasonable conservation goal, but that's the opposite of what this email is promoting.

And if THAT didn't throw you on the floor, then this next one should - because it's from 2006 !!!!!!

U.. S. Oil Discovery - Largest Reserve in the World.

Stansberry Report Online - 4/20/2006

Hidden 1,000 feet beneath the surface of the Rocky Mountains lies the largest untapped oil reserve in the world.

It is more than 2 TRILLION barrels. On August 8, 2005 President Bush mandated its extraction.

In three and a half years of high oil prices none has been extracted.

It looks like this section was modified from an earlier email. Notice that this is yet another internal inconsistency: this estimate is four times the estimate used earlier in the email, which was already over one hundred times the current best estimate of the quantity of recoverable oil in the Bakken Formation. And as seen above, we have been extracting this oil for decades at an increasing pace. 105 million barrels of oil extracted from Bakken between the 1950s and 2007 is a long way from "none".

With this motherload of oil why are we still fighting over off-shore drilling?

They reported this stunning news:

We have more oil inside our borders, than all the other proven reserves on earth.

Here are the official estimates:

8 times as much oil as Saudi Arabia

18 times as much oil as Iraq

21 times as much oil as Kuwait

22 times as much oil as Iran

500 times as much oil as Yemen

And it's all right here in the Western United States !!!!!!

Also notice that once again, the email is comparing proven reserves to in place oil.

So what's the real comparison? Comparing apples-to-apples: the Middle East has over 36 times the proven reserves that the United States does. Remember, the email is claiming that the USA has not only more oil than these countries combined, but the entire world combined. Here are the actual current estimates:

The email's comparison of the US and Saudi Arabian reserves is off by a factor of 100: we don't have 8x the oil of Saudi Arabia, they have 12x the proven reserves we do.

HOW can this BE? HOW can we NOT BE extracting this? Because the environmentalists and others have blocked all efforts to help America become independent of foreign oil! Again, we are letting a small group of people dictate our lives and our economy. WHY?

This is just false. As we've seen, we have been extracting this oil for decades, and the rate has significantly increased in the past few years. Even if we somehow had immediate access to the full supply of this oil Formation, it wouldn't even let us be independent of foreign oil for one year.

James Bartis, lead researcher with the study says we've got more oil in this very compact area than the entire Middle East, more than 2 TRILLION barrels untapped. That's more than all the proven oil reserves of crude oil in the world today, reports The Denver Post.

Again?

Don't think 'OPEC' will drop its price even with this find? Think again! It's all about the competitive marketplace, it has to.

Now this is odd. The email recognizes that oil is an international competitive market, but wants OPEC to 'drop its price' because of an old update to the estimate of the amount of oil found in part of the USA. This is a gross misunderstanding of the oil market. To oversimplify: Oil is a fungible commodity on a world market, so the price is determined by the total world extraction & refining rate and the total world demand. This means that for OPEC to "drop its price", it would have to increase its extraction rate enough to significantly change the world supply, which it has no reason to do. (The EIA has a good explanation of the world oil market.)

Think OPEC just might be funding the environmentalists?

This is also an odd and irrelevant claim. Particularly since oil industry funding of anti-environmentalist organizations is so well documented.

Got your attention yet? Now, while you're thinking about it, do this:

Pass this along. If you don't take a little time to do this, then you should stifle yourself the next time you complain about gas prices. By doing NOTHING, you forfeit your right to complain.

Now I just wonder what would happen in this country if every one of you sent this to everyone in your address book.

If nothing else in this email raised your suspicion, the exhortation to forward it should.

By the way, this can be verified. Check it out at the link below !!!!!! http://www.usgs.gov/newsroom/article.asp?ID=1911

As shown above, while this news release does confirm a couple of the points in this email, it also contradicts the other 2/3 of the email. And that's before you read the FAQ.

Curz Construction: http://www.cruzconstruct.com/services.php

It is interesting that instead of citing another source, the email cites a oilfield service company that is currently expanding its operations in North Dakota.

After researching my response, I found that Snopes had already debunked an earlier version. Independent verifications like this are why I recommend at least checking Snopes before forwarding this sort of email.

It is clear that there is nothing substantial to this email's claim that we can have cheap gas and petroleum independence by simply extracting more oil from North Dakota. Even if we were somehow able to rapidly increase the oil extraction rate in the Williston basin, it wouldn't significantly change gas prices. The way to free ourselves from foreign oil is through efficiency and alternative energy sources.