Shale Daily / NGI All News Access

North Dakota Approves 30,000-Acre Production Unit

The North Dakota Industrial Commission on Tuesday approved a 30,000-acre single oil production unit in an area bounded by a state park and river in the west-central part of the state. The vote was unanimous to allow the atypically large production unit, which is intended to better protect the environment, a commission spokesperson told NGI's Shale Daily.

Located north of Killdeer, ND, 40-50% of the leases on the huge new oil production unit are held by Burlington Resources, according to the commission, which is composed of North Dakota's governor, agriculture director and attorney general. It's expected to produce at least 15 million bbl of crude oil. Burlington will manage the lease holdings as one unit given its extensive holdings of both oil and coal.

"There are a lot of different considerations that go into this, but the large unitization basically allows the company to minimize its footprint in the area since it is in and around a state park (Little Missouri State Park) while at the same time maximizing their economic recovery," the commission spokesperson said. "Without this approach, they [Burlington] would only be able to recover about 28 million bbl; with the unitization they are allowed to recover 43 million bbl."

From the state's point of view, the commission's action minimizes the potential environmental impact and maximizes the energy production. There will be fewer drilling pads and storage tanks, according to Lynn Helms, director in the state Department of Mineral Resources.

Called Lost Bridge, the area was renamed as part of the commission's action, changing it to Corral Creek, which is the name of the federal side of the unit. This newly designated unit includes dozens of potential oil production leases, according to state officials. There are 12 wells currently operating in the area, which is a portion of the thriving Bakken play.

Drilling is expected to start next year under the new designation, and Burlington has a 3.5-year plan that kicks in at that time. It could have to come back to the state for permission to drill after 2015, the spokesperson said. Burlington's plan was reviewed by the industrial commission

Currently, Helms said in his latest monthly report, North Dakota's drilling rig count is holding at 200, just one shy of the state's all-time record count set in August 2010.

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