North Dakota oil production skyrockets on Bakken Shale drilling and development

Currently the fourth-largest oil producer in the United States, North Dakota is only surpassed by Texas, Alaska and California – nonetheless, mounting oil production from North Dakota's prolific Bakken Shale may soon change that.

The US Energy Information Administration recently focused on the recent upward trend oil production from North Dakota in its report entitled, "Rising North Dakota Oil Production: Recent Trends and Future Prospects."

Since 2005, oil production in North Dakota has tripled to an average of 307,000 barrels of oil a day in 2010 – a number that is likely to jump again in 2011. In January 2011, oil production in the state reached an average of 341,000 barrels of oil a day, and in February, North Dakota's oil production averaged 360,000 barrels of oil a day, showing a definite trend upward.

By using horizontal drilling and hydraulic fracturing in the Bakken Shale formation, operators in North Dakota have increased Bakken oil production from less than 3,000 barrels of oil a day in 2005 to more than 230,000 barrels of oil a day in 2010.

Drilling in the state has certainly increased, as well. According to the most-recent report from Baker Hughes, North Dakota currently has 158 rotary drilling rigs active in the state – all of which are drilling for oil. At the same time in 2005, there were only 22 rigs drilling.

Additionally, the rate of production growth in North Dakota far out-paces any other state in the Union. Over the last five years, oil production growth has increased some 40 percent in North Dakota, in comparison to less than a 4 percent increase in Texas and dwindling oil production rates in California and Alaska.

The EIA expects oil production from North Dakota to continue climbing, as elevated oil prices support further development of the Bakken Shale and underlying Sanish Three Forks formation.

Furthermore, the 2008 USGS assessment of the Bakken formation estimated some 3 to 4.3 billion barrels of recoverable oil, a significant increase from previous estimates. (The USGS plans to start a new assessment of the Bakken in October 2011.)

Recently, the North Dakota Department of Mineral Resources projected that production from the Bakken formation could possibly double, jumping to as high as 700,000 barrels of oil a day in the next four to seven years.

Increased oil production in the state is prompting investment in pipelines and infrastructure to transport the crude to eager US markets. In addition to a number of pipeline expansion and construction projects, some companies are resorting to railroads to deliver oil production from the state.

A mega-solution, TransCanada is hoping to start its Keystone XL Pipeline in 2013, but the construction project, which will span two countries and myriad states, is still undergoing the approval process with the US government (although the House voted to expedite the Obama Administration’s decision on the pipeline just this week).

Also facing processing and transport constraints, North Dakota's natural gas production has grown as associated production to the oil.

Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.