Bakken - Home of the Next Big Oil Boom?

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DICKINSON, North Dakota - How can America reduce its dependence on foreign oil? Some maintain alternative fuels are the answer.

But others say "look in our own backyard," and drill for oil in new spots here in the United States.

Click play to watch CBN News Reporter Mark Martin's updated report.

CBN News traveled to North Dakota for an up-close look at what some are calling the next "oil boom."

Hidden Treasure?

With wide open grasslands and rose-colored rock formations, North Dakota's prairies and badlands have a peaceful beauty.

But for many, what lies underneath this landscape is the real draw - or real "play" as they say in the oil industry.

"There's a tremendous amount of oil in the Bakken. Everybody's going after it," said Steve McDaniel of Penn Virginia Oil and Gas.

North Dakota, Montana, and a part of Canada are home to what's known as the Bakken Formation - a massive area covering about 200,000 square miles.

A recent report from the United States Geological Survey put the Bakken on the map.

The USGS has estimated that the American portion holds 3 billion to 4.3 billion barrels of undiscovered, technically recoverable oil.

"It's the largest of any type of oil accumulation in the lower 48. So it's quite significant," said USGS geologist Brenda Pierce, who is on the team that assessed the Bakken.

Jan Zehren, land manager for Penn Virginia Oil and Gas, can't help but smile.

"That's very exciting," Zehren said. "It's very exciting for people that are looking for oil, and that's why we're here."

Penn Virginia Oil and Gas is one of several companies targeting North Dakota as the home of the next oil boom.

"We really believe in the Bakken, and we're going to invest a lot of money to make sure that we get as much oil out of here as we can," McDaniel said.

An Expensive Venture

It's not cheap to drill in the Bakken. Oil company leaders say each well cost about $5 million.

In addition to the two that they already have, Penn Virginia Oil and Gas plans to build six more wells next year, and altogether about 40 wells here in the Bakken. That quickly adds up, but company leaders say it's worth it.

It's worth it for their bottom line, but also worth it considering that increasing the U.S. oil supply could help keep fuel prices down.

It's a scenario that until recently wasn't possible.

"The cost of these wells is substantial, so until the price of oil got to a realistic level, which is anything above $80 a barrel, you couldn't do this," McDaniel said.

It also couldn't be done because the technology wasn't available to properly drill in the Bakken.

Unlike a conventional well, where the oil collects in a certain area, the oil in the Bakken is much more distributed, spread throughout shale rock, primarily, over a large area.

Geologists call it a "continuous oil accumulation," and say it's the largest of that type they've ever assessed.

Pierce said, "These were here before, but our knowledge of them is not what it is now. The technology was not here before to develop these."

But now it is.

Because of computer-aided drilling and new drilling techniques, oil that's dispersed throughout the shale is now accessible.

Bruce Walter manages a rig near Dickinson, North Dakota. When asked if he thought this would be the next big oil boom he said, "Oh, I think it already is." Walter and others are using a technique known as horizontal drilling. The horizontal drilling allows access to oil once locked away in rock, making time out here in North Dakota, workers believe, time well spent.

People who live in the nearby town of Dickinson are also banking on a boom.

Dickinson's Mayor Dennis Johnson says he's already seeing economic growth.

"What's happening here is so different than what's happening in the rest of the nation," he said. "We have rising property values. We have low unemployment. We actually have more jobs than we have people. That's largely driven by this oil development."

North Dakota State Senator Rich Wardner says the entire state is benefiting.

"Right now the state has a budget surplus. And a lot of it's due to the oil activity in Western North Dakota, not only from the oil taxes, but also from individuals that are working out here. The income tax revenues are up. Sales tax revenues are up," Wardner said.

Pain at the Pump

But what about the rest of the country suffering from high energy prices?

The hope is that increasing the nation's supply of oil will bring gas prices down and reduce our dependence on foreign oil.

Drillers and geologists say the Bakken's billions of barrels of oil will help - it will just take time.

One geologist estimated it could take tens of thousands of wells to extract the oil.

"It's not going to happen overnight. That's for sure," McDaniel said. "It's going to take five years to develop this fully, and to help bring that risk factor of depending on foreign oil down, but somewhere in the next three to five years, this is absolutely going to help."

Wardner said, "I think it will make an impact, but I don't think it's going to be the answer. We've got to look for oil and energy resources in other areas, but this is a piece of the pie."

But is it a step in the right direction?

Pierce insists it is "if it's developed, and all of the environmental concerns are addressed."

Critics are concerned about the effects of oil development on the environment and climate change.

But unlike the controversy surrounding the Arctic National Wildlife Refuge and the push to keep it free from oil rigs, the Bakken has been developed for decades, on a small scale.

And supporters say the new technology that could truly open it up leaves less of an environmental footprint.

*Original broadcast July 21, 2008.

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