The Associated Press April 13, 2012, 10:00AM ET

Infrastructure could limit Bakken drilling

Infrastructure challenges in western North Dakota could limit the number of oil and gas drilling rigs in the Bakken system's rich Williston Basin, industry executives said at a conference Thursday.

As companies have flocked to tap resources there, heavy equipment has overwhelmed roads while workers have filled up available housing. The problem is more acute in North Dakota than Montana, said Mark Williams, senior vice president of exploration and development at Whiting Petroleum Corp.

There are close to 220 drilling rigs in the Williston Basin. "We could easily double the number of rigs, purely based on resources," Williams said.

However, he guessed growth could be capped at 300 rigs in the next few years until infrastructure can catch up.

"The North Dakota infrastructure is stressed," Williams said. "The road system is very difficult. It's difficult to move oil field services in this part of the basin."

Frontier Energy Group CEO Dan Eberhart called the infrastructure issues "dire."

"Some roads are literally crumbling. You've got potholes that could eat a truck," he said.

North Dakota has been responsive in devoting money to improve roads, with state legislators approving a massive investment last year, Eberhart said.

Finding places to put employees -- whether for work or sleep -- also is a challenge, he said.

"We've had to basically buy apartment complexes to put our people in. We've got campers around buildings. Housing is a giant, giant issue for us," Eberhart said. Frontier also has sawed down desks in order to fit more people in an office.

Eberhart and Williams spoke Thursday at the Platts Rockies Oil and Gas Conference in Denver.

Meanwhile, the hot Niobrara formation centered in Colorado, Wyoming and Nebraska faces its own challenges. Anadarko Petroleum Corp. is drilling about 80,000 barrels of a day in the Wattenberg field north of Denver, with 20 percent growth expected this year, Anadarko sub-surface manager Scott Bugosh said.

However, the Wattenberg field is in a much more populated area than North Dakota. Under issues classified as "what keeps us up at night," Bugosh listed urban sprawl, surface access to land so the company can drill underground, and weaving 2,000 new horizontal wells between 5,200 vertical wells.

Though the Niobrara is gas-rich, Anadarko has found a well whose production is about two-thirds oil and one-third gas. With oil prices doing far better than natural gas, Anadarko is trying to find more like it.

Bugosh also acknowledged environmental concerns in a state that relies on its mountains, streams and plains for tourism and recreation. "We're in America's playground," he said. "We don't want to mess it up."

Industry officials said they are working on lowering emissions, recycling water, reusing existing well pads and roads, and reducing truck traffic.

They also are looking for ways to capture and profitably sell natural gas that is flared off into the air during oil operations. Especially in North Dakota, a lack of enough infrastructure to collect, move and process natural gas that's extracted along with oil at every well can make it more economically attractive to let the gas escape into the air, said Trisha Curtis of Energy Policy Research Foundation Inc.


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