Staying in the Bakken | VideoJennifer Joas | 12/18/2012
There are 30 shale formations in the lower 48 states, with another 25 yet to be discovered. So for a company like Breilting Oil & Gas, deciding where to drill boils down to money.
"It`s all about capital," said CEO Chris Faulkner.
Faulkner says potential formations need to have a promising initial production, coupled with large recoverable amounts to keep companies operating long term. He says it`s also nice to work in states like North Dakota, where the state understands the industry and provides clear guidelines.
"Regulation is not something to be scared of. Regulation is good because you understand what you`re on the hook for and how you operate these businesses. Because you go to countries like Poland, where the regulation is wishy washy and you don`t know what you`re on the hook for."
Drilling in the Bakken is expensive. It can cost on average nine to eleven million dollars per well, and five million of that is spent on hydraulic fracking. That`s why former governor Ed Schafer says the state needs to find ways to curb that cost.
"We need to be competitive. Our oil is deep. It`s costly to extract. We`re too far away from markets so the transportation impact is important for us. We can lower the cost by reducing the tax."
But for now, the Bakken is the big play.
"We`ve got to be able to not just be every thing to every body. For us we`re really focused on the Mississippi play in Kansas and Oklahoma and the Bakken and Three Forks play. And we think right now those plays for us, until we can get ahead of drilling needs and drill those plays out, those will be the focus of our company," Faulkner said.
Faulkner says if other formations are discovered, it could take an average of five to ten years before they start producing oil.
The Energy Information Administration predicts that over the next 20 years, three trillion dollars will be invested in the Bakken, Marcellus and Eagle Ford formations.