MORGANTOWN, W.Va. — A steering committee of oil industry leaders formed by the North Dakota Association of Rural Electric Cooperatives (NDAREC), has selected the Corval Group to conduct a feasibility study of oil refinery capacity in North Dakota. The project, funded through a cooperative agreement with the U.S. Department of Energy’s National Energy Technology Laboratory (NETL), may spur additional exploration and development of the oil-producing Bakken Formation and the newly discovered Three Forks Formation underlying the Bakken. Increased oil production from these formations could result in a positive economic impact to North Dakota and the region, and a reduction in dependence on foreign oil supplies.
The NDAREC steering committee—which include representatives from production, pipeline, refinery, and petroleum marketing companies—will provide oversight to the Corval Group during the study, approve work products and progress reports, and review and accept the final report. The Corval Group has teamed with two Houston, Texas–based companies, Purvin & Gertz Inc. and Mustang Engineering, to perform the two-phase study. Phase I (to be completed by mid-May) will analyze whether a business case can be made to increase oil refining capacity in North Dakota, which currently is 60,000 barrels per day. If results of this phase show potential, Phase II (to be completed by mid-July) will describe refinery logistics and configuration, capital costs, potential site locations, economical production of beneficial refinery products, and preferred ownership model, i.e. private, public, or private-public.
Oil production from the Bakken Formation in North Dakota has increased significantly over the past 3 years. Total oil production in North Dakota approached 250,000 barrels per day in December 2009, up from approximately 115,000 barrels a day in January of 2007, with the bulk of this increase being Bakken production. A 2008 U.S. Geological Survey (USGS) assessment of undiscovered, technically recoverable oil and natural gas resources in the Bakken yielded an estimate of 3.7 billion barrels.
Major production finds have recently occurred in the Three Forks Formation, which underlies the Bakken. Although this target is still undergoing extensive testing, early evidence suggests it represents another significant western North Dakota recoverable oil pool. Development of new geologic interpretative models, advances in drilling and production technologies, and recent oil discoveries have resulted in substantially larger technically recoverable oil volumes in North Dakota. All indications suggest that production from the Bakken and Three Fork formations will continue to be strong for decades to come.
The NETL-sponsored study has the potential to stimulate exploration and development of the Bakken and Three Fork formations, reduce our Nation’s reliance on foreign oil, and stimulate North Dakota’s economy through additional refinery construction, oil drilling, ancillary businesses development, and increased labor base. In addition to the refining capacity study, NETL is involved in five initiatives to enhance industry’s understanding of the Bakken in order to improve oil recovery from this important domestic resource.