Posted on 09/29/2006 8:17:02 AM PDT by thackney
BISMARCK, N.D. — Marathon Oil Corp.'s plans to drill as many as 300 new wells in western North Dakota within five years haven't been affected by a recent oil price slump, a top executive says.
The Houston-based multinational formally opened an office in Dickinson on Thursday to oversee its recently acquired rights to drill, which cover 200,000 acres in Billings, Divide, Dunn, McKenzie, Mountrail and Williams counties.
The office will employ about 25 people, said Steven Guidry, a Marathon regional vice president. There will be another 25 operations personnel in the field, and as many as eight oil rigs, each responsible for about 125 jobs, he said.
"All total, this represents just short of a thousand jobs created as a result of our decision to move into North Dakota," he said in remarks to the North Dakota Petroleum Council's annual meeting on Thursday.
Ron Ness, the council's president, said Marathon's plans represent a $1.5 billion investment in the state over five years.
Guidry said he was confident the company can unlock oil from the "middle Bakken" formation, which has oil-producing rock between layers of shale about 10,000 feet under the ground.
The middle Bakken has proven lucrative for drillers in eastern Montana, but the formation beneath North Dakota has been harder to solve.
Marathon announced its lease acquisitions in April, and it already has two producing wells, Guidry said. They are located in northern Dunn County.
Oil prices have been declining recently from a high of near $80 a barrel in mid-July. On Thursday, they were hovering around $63.
Guidry said the company's planning included assumptions that the price would range between $35 and $50 a barrel.
"We're positioned right now in about the worst set of circumstances, with softening (oil) prices and higher (drilling) costs," he said. "But we will prevail. It is something that we are accustomed to managing, and we will succeed here."
Marathon's wells will typically be drilled to a depth of about 10,000 feet. The drilling then pivots, moving laterally for another 10,000 feet. The industry describes the procedure as a horizontal well. It is costly.
"We're having to drill four miles, basically, into the earth in order to develop one well," Guidry said in an interview. "The cost associated with horizontal drilling is really what makes the Bakken shale development a high-cost execution issue."
Ness said Marathon's expertise could be the key to providing another boost to North Dakota's oil production.
"They bring a whole new set of resources," Ness said. "The technology on the North Dakota side of the border related to the Bakken really has not worked out all that well yet ... Having (Marathon) in the basin, actively pursuing the Bakken, is extremely important to the development and success of the Bakken."
ping
Excellent news!
Thanks for posting.
ping
I would hope not. Prices are still over $60 a barrel. Shoot, as long as prices stay above $50, they will make out like bandets, assuming they hit on most their wells.
Marathon tried to hire me away from my present company to work on this project about a month ago but I told them they had better make a whale of an offer to entice me to move to North Dakota.
I haven't heard back and probably won't.
I thought Marathon was based in Findlay, Ohio.
Wow, the oil boom continues in North Dakota. Excellent news for people there. I grew up in Williston and people around there are making $25+ for entry level positions on the rigs. My brother has his own welding company and just got a $2 million contract, really unheard of for years in that area. This is only going to make things better for everyone there.
I don't know. Their biggest office is in Houston, but most medium-sized or larger oil companies have several offices around the country.
Good article. I was gonna ping smokin' joe but you beat me to it. It's interesting they mention in the article that the drilling in ND isn't having the great results they're getting in Montana. First time I've seen that mentioned.
300 wells sounds like a lot but from what I read most of the completed wells settle in between 100 and 500 barrels a day. So a lot more drilling needs to be done to realize the full potential of the area. Looks like years of steady work for the folks who are there.
Hey, DG, at least they don't get hurricanes in North Dakota.
Excellent news.
Someone needs to step up to the plate, fight the envirowhackos, and build some refineries though. That's really what makes the fuel prices so unstable these days.
Yeah, but I once was in Williston N.D. in April and got trapped by a blizzard for five days.
Details, details.
We do need some more refineries. But the gasoline price is moving with the price of oil, not refinery margins. Our shortage of domestic oil production far outweighs our domestic refinery shortage. We could nearly triple our domestic oil production and not meet the capacity of our refineries.
The other thing that has happened is demand being reduced. Everyone is driving less, or switching to more fuel efficient means of transport. I know I have, halving my fuel consumption in the past 6 months just by switching from a 14 mpg vehicle to a 30 mpg vehicle, while not changing my lifestyle a bit. Since gas prices only increased by 50 percent or so, I was actually spending less on gas than before the increases. The big producers and auto industry understand this, which is why the Saudis were talking down the market recently.
We do need more refining capacity, that takes years of lead time to manufacture and so will distort the market if there is a sudden increase in demand that can't be met.
Shale oil is cheaper than that. What we need is for the Federal government to get off the stick and approve some of the outstanding proposals. BLM asked for proposals and received more than twenty last summer (2005). They eliminated most, the others are still waiting for approval to proceed.
Seebach: Shell's ingenious approach to oil shale is pretty slick
They don't need subsidies; the process should be commercially feasible with world oil prices at $30 a barrel. The energy balance is favorable; under a conservative life-cycle analysis, it should yield 3.5 units of energy for every 1 unit used in production. The process recovers about 10 times as much oil as mining the rock and crushing and cooking it at the surface, and it's a more desirable grade. Reclamation is easier because the only thing that comes to the surface is the oil you want.
Oil Shale Development in the United States, Prospects and Policy Issues
Shell anticipates that the petroleum products produced by its in-situ method are competitive, given crude oil prices in the mid-$20s per barrel (Fletcher, 2005).
Marathon's stations have consistently had some of the cheapest gas prices around here in the Chicago suburban area. I like buying from them - American company.
Natural gas production has gone down. Chesepeak Oil has said they plan to decrese production over the next year!
Yes, US Natural Gas production has fallen for two years and imports have risen for two years. Environmentalists win again.
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