New discoveries of potential “tight oil” deposits are being made around the US, and no one is sure just how much oil the nation has waiting in geological formations that can now be tapped through new technology.

But the discoveries have already created one boom area, bringing a sparsely populated region of North Dakota gushes of jobs, people and problems no one foresaw.

Tight oil’s promise and challenges were laid out by a panel at the Center for Strategic and International Studies last Wednesday (Dec. 6). As panelists explained it, tight oil is usually found in shales that also contain natural gas and natural gas liquids (NGLs), but so far many more gas-bearing shales have been identified than oil-bearing ones.

But the growing productivity of the Bakken Shale underlying North Dakota, Montana, and two Canadian provinces, which is adding 450,000 barrels per day to US production this year, has oil producers taking a new look at shales and similar low permeability formations that can trap oil deep underground.

Jim Sorensen of the Energy & Environmental Research Center at the University of North Dakota, said about a dozen plays have been identified since Bakken production has taken off, and tight oil could account for 3 million b/d, or more, by 2020. Total resource estimates in the Bakken alone now range from 300 to 500 billion barrels, and the recovery rate with current hydrofracking technology is only 1-2%, leaving a lot of oil for future retrieval as technology improves.

Andrew Slaughter, Business Environment Advisor at Upstream Americas for Shell, said with more people looking, it seems tight oil estimates are increasing “daily.” Known plays include the Eagle Ford in Texas and the Niobrara under Colorado, Wyoming, Kansas and Nebraska.

Once Rural Now Oil Land

But he and Sorensen cautioned about the impacts on lightly populated areas as heavy construction equipment and big rigs begin rolling on local roads, and hordes of workers descend on tiny towns.

Daryl Dukart, county commissioner of Dunn County, North Dakota, a center of drilling activity, said most county towns had fewer than 100 people before the rigs began moving in five years ago. The county, with fewer than 4,000 people spread over 2,000 square miles, had mostly gravel roads, no housing subdivisions, and all-volunteer services like fire and rescue.

The oil bonanza didn’t directly benefit many people because 60-70% of surface landowners don’t own subsurface mineral rights, Dukart said. But the negatives hit everyone.

Roads are clogged and deteriorating, emergency services are slowed by potholes and traffic jams, and the county lacks money to fix them. The small county staff has maxed out overtime trying to cope with a spurt of land sales, mineral leases, title searches, and subdivisions, and the county has trouble replacing stressed workers who depart for better-paid jobs with the drillers.

The sheriff, courts and social services have been overwhelmed with increases in alcohol-related offenses, family abuse cases, and other crime. Criminal and civil court cases have more than tripled in five years. Schools and the single hospital are also taxed.

Dukart said a plurality of residents accept the influx, though older residents generally “say let’s go back to the way it was,” he said.

He said the county has “good working relations” with oil companies, but it’s “two years behind” in being able to handle the boom.

More To Come

More activity is coming as producers add infrastructure. Nearly 8% of Bakken natural gas is now being flared because there’s no gathering pipe connecting to the interstate pipeline system.

Wells are producing more oil than existing oil pipelines can carry, so oil is being trucked and even railed out. Ben Montalbano of the Energy Policy Research Foundation said Bakken oil trades at about $10 a barrel less than Gulf Coast oil because of logistics.

The oil industry’s ability to expand tight oil production, in the Bakken and elsewhere, depends on meeting both infrastructure and environmental challenges, said Sorensen. He cited the 1 to 5 million gallons of water needed per frac job, disclosure of chemicals used in frac fluids, and flaring as top issues.

Shell’s Slaughter said it’s “important for the industry to step out,” operate transparently including disclosing frac chemicals, maximize water recycling, and “maintain public confidence.”

The industry needs a “public license to operate,” he said, and that includes fostering intelligent regulation. “We need regulatory capacity to grow in line with the industry,” he said.

Photo Caption: A pelican rests on a piling with an oil rig in the background April 18, 2011 in Dauphin Island, Alabama.