North Dakota’s oil patch accounted for less than 1% of total U.S. crude oil production three years ago, but today the state is pumping close to 6% of total crude output, thanks to the formidable Bakken-Three Forks shale region, the state’s Department of Mineral Resources (DMR) is reporting.

And it’s getting even better. More than 2,000 new wells are slated to be drilled this year, which is double the number drilled in 2010, DMR Director Lynn Helms said last week.

North Dakota’s portion of the Bakken Shale and Three Forks oil formations just a few years ago was estimated to contain about 5 billion bbl of oil. However, the estimates may more than double based on producers’ drilling successes and current production rates.

There are “indications that we could reasonably get 11 billion barrels,” Helms told North Dakota’s Bismark Tribune.

Around 850 new drilling permits have been finalized and are awaiting ramp-up in the oilfields; as many as 20 new permit applications are arriving at state offices every week, Helms said. This year drilling is “going to be bigger than anything we’ve had yet.”

In 2006 North Dakota was the ninth largest oil producer in the United States. Today it’s moved into fourth place; output at the end of 2010 was approaching an all-time high of 342,000 b/d, according to state data. Around 166 drilling rigs were operating last year, also a state record.

If state production data is on track, North Dakota should end up producing about 110 million bbl in 2010, which would be well ahead of 79.7 million bbl produced in 2009 and more than double the number produced just three years ago.

However, the oil potential is just beginning to be tapped, said Helms. Based in current projections, North Dakota could be producing as much as 700,000 b/d of crude oil within four to seven years. At that rate North Dakota would leapfrog California and Alaska, and trail only Texas in oil output, based in current output, according to the Energy Information Administration (EIA).

Producers appear to like what they see. In less than two months public deals reported by NGI‘s Shale Daily to acquire Bakken Shale leasehold have totaled around $4 billion.

In November Williams agreed to pay $925 million to acquire 85,800 net acres in the Bakken play (see Shale Daily, Nov. 16, 2010). A week later Hess Corp. said it would pay $1.05 billion in cash to acquire 167,000 net acres in North Dakota (see Shale Daily, Dec. 30, 2010; Nov. 24, 2010).

Occidental Petroleum Corp. in December agreed to pay $1.4 billion to a private seller to acquire 180,000 net acres in the Three Forks Formation (see Shale Daily, Dec. 13, 2010).

According to the DMR, up to 200 rigs are expected to be operating in North Dakota this year. The new production — and with it, the influx of new people — is “going to push our limits, it certainly is,” Helms said. According to the North Dakota Oil and Gas Division, at least half of the new wells are expected to be drilled in a 70-mile radius around Williston, ND.