Montana Bakken Oil: 'Great News for a Great Play'

Activity in the huge Bakken field is going home.

Home is Montana, where the Bakken was originally discovered.

Drilling equipment and crews are moving back across the border from North Dakota – where the Bakken boom has been the biggest – boosting Montana’s rig count to 22 from just eight at this time last year. Montana’s Department of Natural Resources and Conservation issued a record 356 oil drilling permits in the first ten months of the year, easily beating the previous record of 313 set in 2005.

 

Note the declining rig count in North Dakota (blue line) contrasted with the rising count in Montana (red line). Thanks to the Federal Reserve Bank of Minneapolis for the figure.

In October a Texas company paid $13.5 million for 75,000 acres of oil and gas leases, one of the largest federal lease acquisitions by a single company in Montana in recent years. Several other companies, including Bakken leader Continental, are working to expand the boundaries of the state’s most productive Bakken field, known as Elm Coulee.

Investors often forget that the first successful horizontal well drilled into the Bakken was drilled into the Elm Coulee field in Montana, drilled by Lyco Energy Corp. in 2000. There were earlier wells, even horizontal ones, but this 2000 Lyco well is widely cited as the first successful one. (For more, check out this a cool timeline of the Bakken here: http://www.undeerc.org/bakken/pdfs/BakkenTimeline2.pdf)

But geology doesn’t pay attention to state lines… and even though the Bakken boom started with a few good wells in Montana, attention shifted next door after operators decided the geology in North Dakota offered more potential.

There is still an immense amount of oil in the Bakken, which means investors can still find ways to profit from this fantastic formation. But instead of coming late to the North Dakota Bakken party, where six years of profits have left slim pickings, a more savvy choice might be to check out the new scene next door.

Background – Why the Bakken Moved to North Dakota

The Bakken is a 200,000-square mile rock unit within the even larger Williston Basin, an ancient inland sea that reaches from southern Saskatchewan to North Dakota and eastern Montana. The Bakken therefore touches four states and provinces, and in the early days of the Bakken boom – way back in 2006 – drilling was fairly evenly split between North Dakota and Montana.

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