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Bakken Potential Vast, Technology Key, Says Liberty CEO

There are up to 500 billion bbl of oil in the Bakken/Three Forks shale plays in North Dakota, but how much of it is ultimately produced will depend on a complex mix of technology and economic decisions still to unfold, according to Chris Wright, CEO at Liberty Resources and its services unit, Liberty Oilfield Services LLC.

"The real question is how much [of this potential] is going to come out of the ground," said Wright, during a Wells Fargo Securities conference call Wednesday. In tight rock, that answer is driven by two things -- a large enough contact area to overcome very low permeability, and high conductivity to flow the oil and gas back through low-permeability rock, he said.

Multi-stage hydraulic fracturing (fracking) and multi-fracks for each stage are now becoming the norm in the Bakken and other shale plays, according to Wright. Liberty President Mark Pearson said by applying a "significant increase in fracking intensity" almost all Bakken operators could raise their estimated ultimate recovery (EUR) from wells by 50%.

"We expect to significantly uplift our own [EUR] quite significantly in Liberty's ‘chapter 2’,” its second phase of development in the Williston Basin, “as we continue to move up the curve of increased frack intensity," Wright said. "We don't think the optimum tradeoff of investment in the well and EUR has been reached."

Pearson described EURs growing by two or three times based on Liberty's design for intense fracking.  "In the past I might have had some resistance to more intense fracking as people would argue that you are just getting the same [total volume of] oil, but getting it faster," he said. "That is not the case, particularly in these tight resource plays.

"Not only will we get more initial production,  we will actually double or triple the EUR of the wells. As Chris said, we focus on the dollars/boe that we are going to recover -- not just the dollars/well -- and the rate of return."

Wright noted that in the past nine months the shale industry has witnessed an increase in more frack intensity, the amounts of sand (or ceramics) has trended up, and the speed in drilling wells has accelerated.

Even with the intense activity in North Dakota, Wright said the market for fracking crews has loosened up after being tight three or four years ago in the early accelerated ramping up of drilling activity in the Bakken. Fracking service providers have ramped up.

"In 2003, there was 2 million hp of fracking capacity in North America; today there are 20 million hp," Wright said. "That is a 10-times increase in pressure pumping capacity. However, the market leans toward the tight side, and then two or three years ago the market began to loosen. That bottomed out last fall, and the market now is slowly tightening down."

In response to another question, Wright said the market has tightened about 5% in the past six to nine months, compared to where it had bottomed out.

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