In Sodak, our prices have dropped below $3.50, which we haven't seen for quite a while.
From the sounds of what is happening on the oil front, our gas prices should even go lower. Newt may have had a heads up on this when he stated we could have $2.50/gallon gas in the near future. This story would also lead us to think that way.
“Eighty Times Bigger Than The Bakken”
Jun 6, 2012
That’s how a shale oil play in Russia is being described. It’s not a new discovery; like the Bakken it’s been studied for decades but only recently has the technology and market conditions aligned to make production there profitable.
But the scope of it is mind boggling.
It’s in Western Siberia, in Russia. And while the Bakken is big, the Bazhenov — according to a report last week by Sanford Bernstein’s lead international oil analyst Oswald Clint — “covers 2.3 million square kilometers or 570 million acres, which is the size of Texas and the Gulf of Mexico combined.” This is 80 times bigger than the Bakken.Here’s the the mind boggling part:
Getting access to the Bazhenov appears to be a key element in both ExxonMobil and Statoil‘s big new joint ventures with Kremlin-controlled Rosneft. Exxon’s recent statement says the two companies have agreed “to jointly develop tight oil production technologies in Western Siberia.”
No wonder. The geology of the Bazhenov looks just as good if not better. Its pay zone averages about 100 feet thick, and as Clint points out, the Bazhenov has lots of cracks and fractures that could make its oil flow more readily. The couple of test wells that he cites flowed at an average of 400 barrels per day. That’s in line with the Bakken average.
If Harold Hamm is convinced the Bakken will give up 24 billion barrels, a play 80 times bigger like the Bazhenov would imply 1,920 billion barrels. That’s a preposterous figure, enough oil to satisfy all of current global demand for 64 years, or to do 5 million bpd for more than 1,000 years. Rosneft, says Clint, has already estimated 18 billion barrels on its Bazhenov acreage. Either way, it looks like they’ll still be working the Bazhenov long after Vladimir Putin has finally retired and the Peak Oil crowd realizes there’s more oil out there than we’ve ever imagined.What does this mean for the Bakken and North Dakota? It means that we aren’t going to have the shale oil boom market to ourselves for much longer. Other shale oil plays here in America have already been ramping up for years, but as people use the Bakken as a guide, more and more shale oil plays are going to open up around the globe.
That’s going to mean a wealth of new oil reserves on the market, and most likely dropping oil prices.
It may be time to re-visit that fix to North Dakota’s too-high, variable oil extraction tax to keep the play here competitive as these other plays open up (something former Governor Ed Schafer was pushing for in the last legislative session). The conventional political wisdom I’ve heard from some quarters is that we’ve got nothing to worry about. The Bakken play will last for decades, at least, so why not get what we can from the oil companies while we can get it?
It’s becoming clear that if we want the play to last for decades, reform will be necessary.