Investors Need to Dig Into the Bakken Shale

The huge oil deposits there could be portfolio-changing investments

For many domestic energy investors, the Marcellus shale formation in the eastern U.S. has been the premier play on the future of Americas energy independence. After all, the rock formation has some of the countrys richest deposits of natural gas and will represent a major source of supply for years to come. However, the new drilling techniques known as hydraulic fracturing, or fracking, are also breathing life into another shale formation, the Bakken oil shale of North Dakota and Montana. It could be the biggest domestic oil discovery in the last 40 years. For investors, betting on this new source of supply could be a portfoliochanging event. While first discovered in 1951, it wasnt until recently that the Bakken shale formation really got cooking. As with many other shale rock formations in the U.S. and Canada, the increased adoption of advanced drilling techniques and fracking has allowed energy and production (E&P) firms to finally tap the rich energy resources locked in those rocks. According to the U.S. Energy Information Administration, production in the Bakken shale formation went from a mere 3,000 barrels a day in 2005 to more than 225,000 in 2010. In September, the region produced a record 464,129 barrels a day, putting it on a path to surpass OPEC member Ecuador in terms of production. Overall, analysts estimate that region could be producing a million barrels a day by 2020. Current Bakken wells are reaching 19,000 feet and beyond and are producing a staggering 3000+ barrels of oil per day. However, the costs are accelerating and reaching $25,000,000 per well due to the ever increasing expense for hydraulic fracs. Billions of Barrels Despite the jumps in production, the Bakken could be providing energy for long time to come. In 2008, The U.S. Geological Survey (USGS) published a report on the Bakken shale that shows the region holding around 42 billion barrels of oil that is recoverable with current technology. However, the report also said the region has total reserves in the range of 200 billion to 400 billion barrels. As

drilling technology continues to advance, the Bakken could hold the key to Americas energy independence, job growth and economic resurgence.