THE ENVIRONMENT AND THE ECONOMY:
HYDRAULIC FRACTURING AS THE
INTERSECTION OF SUSTAINABILITY
North Dakota Oil: The Bakken and Three Forks Formations
© 2011 Joshua P. Fershee
THE NORTH DAKOTA DIFFERENCE
July 2011
424,000 bopd
Data from US Energy Information Administration
© 2011 Joshua P. Fershee
Source: North Dakota Dep’t of Mineral Resources
THE NORTH DAKOTA DIFFERENCE
 The Bakken Shale is different than the Marcellus and many other regions
 Current extraction is about 90% oil and 10% gas, with almost two-thirds
of the oil being extracted via hydraulic fracturing.
 North Dakota is on pace to pass California this year, to become the #3
oil producer in the United States
 Unlike the Marcellus and other gas shale plays, price doesn’t seem to be
a concern.
© 2011 Joshua P. Fershee
THE BAKKEN PLAY
© 2011 Joshua P. Fershee
NORTH DAKOTA: BAKKEN & THREE FORKS
AREA
BAKKEN
FORMATION
ESTIMATED MATURE AREA OF THE BAKKEN FORMATION
Mature
area
THREE FORKS
FORMATION
(Nordeng, 2010)
© 2011 Joshua P. Fershee
Source: North Dakota Dep’t of Mineral Resources
BAKKEN POOL: BAKKEN AND THREE FORKS ASSESSMENT
Three Forks Fm.
EXPECTED ULTIMATE RECOVERY
Bakken Fm.
48%
2.1 billion barrels 1.9 billion barrels
52%
(Nordeng and Helms, 2010))
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
NORTH DAKOTA FRACKING OPERATION
Performing hydraulic fracture stimulation south of Tioga
• all Bakken wells must be hydraulically fractured to produce
• > 2 million gallons of water
• > 3 million pounds of sand
• cost > $2 million
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
Vern Whitten Photography
Small Footprint
• Developed 13,000 acres
• 14 wells
• rough topography
• LMR Confluence
NORTH DAKOTA WELL SITES
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
NORTH DAKOTA DRILLING– OCT 2009
NORTH DAKOTA – 54 DRILLING RIGS – Oct 2009
One year ago, drilling activity was focused
in Mountrail and Dunn Counties.
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
NORTH DAKOTA DRILLING– OCT 2010
NORTH DAKOTA – 153 DRILLING RIGS – Oct 2010
Current drilling activity is focused
in Mountrail, Dunn, McKenzie, and Williams Counties.
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
NORTH DAKOTA DRILLING– OCT 2011
NORTH DAKOTA – 200 DRILLING RIGS – Oct 2011
NORTH DAKOTA – 153 DRILLING RIGS – Oct 201
Current drilling activity is focused
Current drilling activity is focused
in Mountrail, Dunn, McKenzie, and Williams Countie
in Mountrail, Dunn, McKenzie, and Williams Counties.
Source: North Dakota Dep’t of Mineral Resources
© 2011 Joshua P. Fershee
THAT’S TACO JOHNS!
© 2011 Joshua P. Fershee
Source: Blake Ellis/CNNMoney
THE GOOD, THE BAD, & THE UGLY
 CNNMoney: AMERICA'S BIGGEST BOOMTOWN
 Earn $2,000 a night as a boomtown stripper (in Williston,
ND)
 Housing Costs Skyrocket/Camps
 Traffic & Safety Concerns
 High Poverty and Prosperity Rates
© 2011 Joshua P. Fershee
JOBS & INCOME
POVERTY & HOMELESS
 Jobs:
 170-225 new rigs = 20,000 jobs in drilling
 Anticipated 28,000 new wells & 28,000 long-term jobs over 15-25 years
 Income
 McKenzie County: In the top five ave. annual wages at $51,493 in 2010
 Poverty
 McKenzie County's poverty rate is 12.8%, when state average =11.7%
 Homelessness
 6-figure salaries, no where to live: “My address is Wal-Mart”
 “Lucky” to live in a man camp
© 2011 Joshua P. Fershee
© 2011 Joshua P. Fershee
SEEING A TREND?
Source: http://www.mongabay.com/images/commodities/charts/crude_oil.html
© 2011 Joshua P. Fershee
NORTH DAKOTA SPEAKS:
ND HOUSE BILL NO. 1216
SECTION 1.

Hydraulic fracturing - Designated as acceptable recovery process.
Notwithstanding any other provision of law, the legislative assembly
designates hydraulic fracturing, a mechanical method of increasing the
permeability of rock to increase the amount of oil and gas produced from
the rock, an acceptable recovery process in this state.
 SECTION 2. EMERGENCY.
This Act is declared to be an emergency measure.
© 2011 Joshua P. Fershee
NORTH DAKOTA SPEAKS:
ND HOUSE BILL NO. 1216
 Loosely translated:
“We really, really like fracking. Please leave us
alone!”
© 2011 Joshua P. Fershee
WHEN, NOT IF, LOCALS FIGHT BACK
 Crime
 Williston Police Department: the number of accidents it investigated
jumped 30% last year to 974, and traffic misdemeanors increased 30% from
324 in 2009 to 421 in 2010.
 Housing:
 One-bedroom apartments can run around $1,500 a month, while two- to
three-bedroom apartments are often around $3,000.
 Zoning, Zoning, Zoning
 Infrastructure problems
 Traffic Problems
© 2011 Joshua P. Fershee
NEED FOR OVERSIGHT
 "It's a fire drill every day.”: Lynn Helms, Director, North Dakota
Department of Mineral Resources
 In February 2011: Agency's staffing designed to handle 100 rigs and
about 5,000 wells
 But, 169 rigs were running and 5,300+ wells were pumping oil.
 2,000 more new wells are expected by the end of 2011.
© 2011 Joshua P. Fershee
SHORT-TERM FOCUS COULD BE
LONG-TERM PROBLEM
 Dep’t of Mineral Resources monitored a record 1,213 new wells last year
 Visited each site at least six times during the three-week construction phase
 The inspectors ensure, among other things, that the steel pipe driven into the ground and
cemented into place is done correctly to prevent groundwater contamination.
 The oversight of well construction is adequate but other
monitoring is lacking.
 Nearly 900 disposal wells that hold saltwater, a byproduct of oil production,
and about 5,200 sites that hold other oil waste are being monitored only
twice annually at best, agency records show.
 Disposal wells should be visited at least six to 12 times a year
© 2011 Joshua P. Fershee
PROPOSED SAFETY REGULATIONS
 43-02-03-28. SAFETY REGULATION, ADDS: The director may
require remote operated or automatic shut-down equipment to be
installed on, or shut in for no more than forty days, any well that is likely
to cause a serious threat of pollution or injury to the public health or
safety.
 ADDS: No well shall be drilled nor production or injection equipment
installed less than five hundred feet [152.40 meters] from an occupied
dwelling unless agreed to in writing by the surface owner or authorized
by order of the commission.
 Not Exactly Norway, but it’s a start
© 2011 Joshua P. Fershee
COMPARE: § 33: EMERGENCY
SHUTDOWN SYSTEM
Petroleum Safety Authority (Norway): Guidelines Regarding the
Facilities Regulations
 Facilities shall have an emergency shutdown system that can prevent
the development of hazard and accident situations and limit the
consequences of accidents . . . .
 It shall be possible to manually activate functions from the central
control room that bring the facility to a safe condition in the event of a
fault in the parts of the system that can be programmed.
Coincidence? Norway’s Statoil just bought Bingham, a Texas
company, with 375,000 net acres in the Williston Basin
© 2011 Joshua P. Fershee
23
AVOIDING THE BIG RISK,
SEEKING THE BIG REWARD
 Economic Sustainability requires Environmental Sustainability
 Fracking problems will be dealt with differently than traditional oil
pipeline spills
 Long-Term price support in oil makes it different from gas fracking plays
 Collateral Damage: Human, Environmental, Political
© 2011 Joshua P. Fershee
MULTI-FACETED ISSUES NEED
MULTI-FACETED APPROACHES
Economic
Environmental
Social
© 2011 Joshua P. Fershee