The Bakken formation spanning North Dakota, Montana and part of Canada contains more oil than the Persian Gulf.

North Dakota Oil Boom 

By STEVE AUSTIN for OIL-PRICE.NET, 2012/08/13

This article was written by <a href="http://oil-price.net/en/articles/north-dakota-oil-boom.php">Oil-Price.net</a> which provides free information on crude oil.

Readers of oil-price.net have often wondered why the US isn't self-sufficient in oil, that is, in spite of the perceived abundant reserves. They may have a point, just so. Let's take a case to illustrate the oft repeated gasp -Why do we import oil, still. North Dakota.

North Dakota is the second largest producer of oil in the US, next only to Texas. In the last two years, oil output from North Dakota more than doubled, multiplied by five since 2006. With over 600,000 barrel/month, North Dakota now supplants Alaska in oil production. With the insatiable demand for oil, North Dakota satisfies three percent of the US oil consumption. It also accounts for ten percent of all US oil production. For more promises of better things in the oil field, there is Bakken.

Bakken, to explain it further, is the largest oil formation discovered in the last forty years. The estimated amount of oil in the Bakken Shale Formation is said to be 900 billion barrels. For a comparison, if you may, Bakken has more oil than the entire Persian Gulf (747 billion barrels). According to the U.S. Geological Survey, this oil formation is located in the Williston Basin, and is the largest 'continuous-type' oil accumulation ever assessed, stretching from Canada into North Dakota and Montana. Appetizing, isn't it? More so, if one considers the country's dependence on crude imports.

Let's take a brief look at the import scenario. In May, crude imports surged to 8.909 million barrels a day, according to reports from the Energy Information Administration, a 3.7% increase from April, and highest since October 2011- in spite of the rising contribution from North Dakota. Canada is the largest supplier of crude as of May (2.378mn b/d) with Saudi Arabia coming second (1.465mn b/d) and Mexico third (at 956,000 b/d). Of course, the consumption of oil in the country rose from a year ago too. According to EIA, the oil demand in the US climbed to 18.707 million barrels per day in May. This is 1.87 percent more than the projected estimate. Just reinforces the already known fact- the need for oil.

Now, what's so complex here? We have already established that there is enough oil reserves and that the need for oil is only increasing, so why not just 'drill it' - as our readers keep saying. That simple? Probably not. Bakken has oil, no doubt. The catch? Oil is 15,000ft deep in the Bakken Shale Formation, only a fraction of which is recoverable with today's technology. Yet, recoverable it is, and hence the oil boom- Bakken oil boom as it has come to be known. The technology used, you may have heard: Fracking.

Whether as plot in novels or at the heart of conspiracy theories, fracking has captured the popular imagination, a synopsis for any future doom associated with earthquake in the world.

And, what is fracking? It's short for Hydraulic Fracturing, a technique used to extract gas from rock formations. In this technique, mining companies drill into the rocks injecting sand, water and chemicals under high pressure to crack the rock and create fissures (called veins) in the layers underground. The fissures created by these fracking fluids allow the recoverable natural gas or oil to escape and be collected. If not for fracking many of the reserves would still be untapped. Fracking, it has to be said, is not without a series of serious drawbacks. The technique used, if you read above, is like a mini Earhquake. And, we are yet to know the effects of fracking in sensitive zones. For that matter, any place on Earth will always be a sensitive zone. Earlier the smaller quakes in Oklahoma, Colorado and Arkansas have been linked to hydraulic fracturing.

According to a report by the National Research Council, hydraulic fracturing is unlikely to trigger large earthquakes. However, the study does point to the risk of man-made seismic activity when waste water from the drilling is injected back into the ground. "While the general mechanisms that create induced seismic events are well understood, we are currently unable to accurately predict the magnitude or occurrence of such events due to the lack of comprehensive data on complex natural rock systems and the lack of validated predictive models," the study reports.

The report also notes that only two instances of tremor- one in Oklahoma of 2.8 magnitude and another in England of 2.3 magnitude- are attributed to fracking. Hold a minute. What? Read again: The report suggests that hydraulic fracturing has been confirmed to cause 'seismic events in 'a very limited number'. (The U.S. Geological Survey too acknowledges seismic disturbances with the waste water injection.) Well, minor or major, it's hardly a source of comfort to note that fracturing can cause earthquakes.

It doesn't stop with earthquakes. Fracking in the new veins in the ground allow water to come in contact with oil and become contaminated. Naturally, the EPA and watch groups are up in arms against fracking as it pollutes the air and contaminates the soil surface. As the long term risk to underground drinking water and to public health is no laughing matter, many countries, unsurprisingly, have banned the practice.
On the flipside, it's one of the important techniques that make the North Dakota dream possible. If not for fracking, oil in many formations would be too expensive for a conventional oil drill. If many people still support fracking, in spite of all the drawbacks, it's because of the oil potential-an important factor to reduce dependence on imports. Together with Horizontal drilling, fracking has made the North Dakota dream a possibility. Both the techniques are expensive, but the oil companies can afford, what with the oil prices averaging nearly $100 a barrel, and they are rushing in. Of course, cheap oil can bust the boom in no time. Well, that doesn't seem realistic in the near future, does it? Another equally potent dampener would be unnecessary rules-this doesn't mean that the oil companies should be given a lease to pollute as they wish. They should be made accountable for the waste water pumped, any destruction caused.

Indeed, fracking isn't the only hurdle in North Dakota. The oil revenues have climbed to $839 million in 2011, with expected revenue of $2 billion in the next two years. The population has grown phenominally-an increase of 13 percent from 2009 to 2010- but the infrastructure lacks behind the boom. The local power demand has surged even as the power companies struggle to provide. And new wells demand more power. Also, there's a lack of pipeline in the region, so oil is transported by trucks and trains. Part of the charm of North Dakota is the laidback rural ambience it's been known for. That is definitely changing reminiscent of industrial revolution or the frenzied gold boom of yesteryears. The infrastructure, though, hasn't stepped up to the challenge. The rural two lane narrow roads, not envisaged to accommodate the gargantuan trucks, suffer the most. Rebuilding the roads ravaged by the huge trucks would need massive input of funds, in fact, more than the present oil revenues. North Dakota also has problems of traffic congestion, inflation and housing crunch. It doesn't stop there. No way. The crime rate is increasing, especially thefts and burglaries, in the said oil zone. In Williston the crime rate has doubled in the decade starting 1999. So what is the next step? Slow down, add in more regulation and kill the boom? The trick is to deftly manoeuvre the resources and not kill the goose for one egg.

North Dakota: miracle or policy success?

North Dakota's oil boom coincides with Obama's arrival into office. Is this pure coincidence? Perhaps.

§  North Dakota's oil reserves are enough to make the US energy independent. For the Obama administration, energy independence is a dear goal, the pursuit of which must be realized through renewable energy. Quite the opposite of what is happening in North Dakota. Fracking, anyone?

§  North Dakota is largely (2/3) Republican. That's as red as it gets. In reality the state was shielded from Washington influence thanks in part to private oil interests. The oil boom brewed in-state, it didn't trickle down from Washington.

§  North Dakota has more than 4,000 wells producing oil and gas. In addition, 1,927 permits were issued last year, and 627 have been issued so far this year. Each drill brings in more employment and revenue. Though the oil boom in North Dakota is recent, the oil industry in North Dakota is more than five decades old.

§  Obama tiptoes around North Dakota. After all North Dakota achieved impressive results, the envy of many, by doing the opposite of Obama's agenda: relying heavily on fossil fuel extraction, with methods adverse to the environment. In Williston, there's almost nine job opening for every person looking for one. North Dakota created jobs where Obama didn't. The average household income has risen to historic heights-more than 100 percent in some towns. North Dakota allows the US to get closer to energy independence and allow $15 billion to remain in the US economy instead of being invested in terrorist-supporting nations.

With the upcoming elections, there is no doubt politicians will try to be associated with North Dakota's success story. But ironically North Dakota's success lies in its protection from government interference and free enterprise. North Dakota CAN-just let them be.

 

 Islamic militants understand the importance of controlling petroleum resources.

 Takeover of Oil by Militias

By TOBIAS VANDERBRUCK for OIL-PRICE.NET, 2012/10/01

This article was written by <a href="http://oil-price.net/en/articles/takeover-of-oil-by-militias.php">Oil-Price.net</a> which provides free information on crude oil.

Iraq wars 1 and 2 were fought as much on the ground as in the media. Embedded journalism, the war on terrorism, toppling an evil dictator and spreading freedom were all images used to instill on the public, justification for the invasion of Iraq. These wars were a paid spokesperson's dream come true: immense budgets to convince the public that they were not wars for oil. Most journalists avoided to portray these as wars for oil for the sake of their careers. How the spin doctors worked, you'd be pardoned to believe of a flat Earth the size of Texas. Not without basis, the fact is, anything is justified for oil, even mendacity.

As a result of the biased reporting from the Middle-East, our culture seems to be hit with the disease of a casual attitude to war, setting new extravagant standards in catching collective attention. Indeed, journalist attempting to report on insurgents put themselves at risk, like the female US journalist who was sexually assaulted by a mob in Egypt. Consequently very little gets shown to the public and these insurgency are romanticized as struggles for democracy, which they are not. They are struggles to control the world's resources and fund terrorism.

In fact, many of today's ongoing wars fail to capture people's attention and, unfortunately, some of these wars are taking place right under out nose. Yes, today's oil wars are happening right now. The worrying trend is that they are more numerous than ever before. Here are some:

Sudan

Essentially, it's religion at play here. The conflict: There's been two civil wars in 1956 and 1983 between a predominantly Arab Islamic North and a Non-Muslim South (Animist and Christian). Not to forget, it's been only six decades-and a few years- since the independence of Sudan itself. About a year ago South Sudan left Sudan putting an end to the civil war. But, things are far from normal. South Sudan is rich in oil with an output of 350,000 barrels per day, in other words, three quarters of a united Sudan's oil output. Naturally, Sudan still has a bad South Sudan hangover. In January, South Sudan shut off its oil production. Ask why? The landlocked country had disagreements over fees to be paid to the North for oil exports through Sudan to the Red Sea port. Rather a bold move, one has to say, as South Sudan depends on oil for up to 98 percent of its state revenue. Well, sadly, the new country didn't have money to buy food or medicine, thus. Last month, both the countries decided to resume exports from South Sudan after an interim agreement. But, according to the Finance Minister of South Sudan, the country would be able to pump only at about seventy per cent of its capacity. A development, nevertheless, even if it takes three months for the oil to reach the Red Sea Terminal at Port Sudan. Also, both the countries have agreed for further talks, which is a good sign. Still, the road ahead is long, so are the problems.

Iraq

According to a study by the International Center for Development studies, Iraq is not able allocate resources for infrastructure projects in spite of more than '$100 billion in oil reserves for 2012'. The study blames it on corruption and bureaucracy. To soak up on this, here's some background: Oil production in Iraq is about 3.2 million barrels per day, while the exports are around 2.5 million barrels per day. The proven reserves stand at about 143.1 billion barrels of oil. No wonder, countries invaded Iraq giving flimsy reasons. So, what have we got after the invasion? An Iran-influenced Islamic republic in the making. The Shia-Sunni strife has intensified after the invasion, and continues to strike Iraq at regular intervals.

Libya

Recently the US ambassador to Libya J. Christopher Stevens was killed by Islamic militants in a well-planned attack. What has the Arab spring done or undone? Reports suggest that the Ambassador was killed by militants based in Libya itself. Make no mistake; the unrest over the volatile video is just a mask to destroy any western influence in Libya. When rebel fighting broke out in Libya, it cannot to be attributed to coincidence alone that the main oil ports and facilities were taken over in the first move. Only later did the war spread to the cities. Not without reason, of course. Libya has the world's fifth largest reserves, the first in Africa. It is also a member of Organization of Petroleum Exporting Countries (OPEC). According to EIA, the crude oil production stood at 1.4 million bbl/d in May 2012. And it's anyone's guess how the political situation is going to pan out in the coming months. At present, there's growing concern over the security situation in the country. Like Iraq, there are more chances of an Islamic administration in Libya too. EIA too warns of changes in Libya's oil sector"depending upon outcomes of political processes that have yet to run their course."

Iran

As of January 2011, Iran had an estimated 137 billion barrels of proven oil reserves, 9.3 percent of the world's total reserves and over 12 percent of OPEC reserves. But, well, if one goes by the Iraqi oil minister, the country has 154.8 billion barrels of oil with new discovery of reserves in SouthWest Iran. And, the International Energy Agency has stated that the oil exports from the country stepped down to 1 million barrels a day in July from 1.74 million barrels a day in June.

Further, Iran is the second largest producer in OPEC, next only to Saudi Arabia. Crude exports contribute to about 80 percent of the foreign revenue. How profitable it'd have been for the country, then, to tone down its belligerence. Instead, Iran continues with its threat to block the Strait of Hormuz. This strait is a major oil route for countries in the Persian Gulf, including Iran. In 2011, about 17 million bbl/d flowed through. At its narrowest, the strait is just 21 miles wide. Iran uses this geographical formation to its advantage, threatening to choke the strait, at regular intervals. Sadly, Islamist fundamentalist threaten to take over 20% of the world's oil traffic if the West interferes with their nuke plans.

Nigeria

In Nigeria, the Movement for the Emancipation of the Niger Delta (MEND), a terrorist group, has one target in mind-oil. It frequently abducts foreign employees working in oil installations, attacks oil pipelines and other installations and steals oil as well. Four years ago, MEND had almost paralysed the oil industry of Nigeria with its assaults. Nigeria has the second largest oil reserves in Africa and the world's 11th largest oil reserves. As of January 2011, Nigeria's estimated oil reserves stood at 37. 2 billion barrels. Majority of the reserves are along the Niger River Delta. Niger Delta is, thus, vital for the income of the government. In 2009, the militants had accepted a peace deal from the government in lieu of cash and employment opportunities. Yet, recently they have returned bringing violence in their wake. Compounded by infrastructure problems the Niger Delta continues as a source of contention.

The pattern is obvious: Islamic terrorist groups, foreign and domestic, are waging multitude of wars to take over smaller yet significant oil producing nations. And gradually these oil resources are falling into the hands of political Islam. Dodging these militants is becoming an almost impossible task. This should have the western world concerned as it is extremely hard and expensive for western military to fight simultaneously multiple wars at separate locations, a thing terrorists have learned from recent experiences in Iraq and Afghanistan.

Will the gunning down of US ambassador in Libya be a wake-up call to the West? According to Jacques Beres, French co-founder of Doctors without Borders recently returning from a clandestine Syrian hospital, an estimated 60% of rebels fighting in Syria are foreign Islamic fighters there to set up an Islamic state under Sharia law to become part of the world emirate. This corroborates what Syrian president has been consistently saying. And Russia. And Israel. But for now western powers fail to notice the trend whereby one by one, oil-producing nations turn into mini-Irans who understand the fundamental importance of controlling the world's oil and the leverage it gives to any ideology. Just like Iran understands it.

Conclusion

All the countries mentioned above can alter the price of oil in a second. Somehow, it doesn't feel fair that the ordinary person on the street has to pay the price for the takeover of oil rich nations by religious extremists, does it?

Oil wars are ongoing as we speak. Not only are oil resources depleting worldwide but key ones are falling into the hands of the enemy. The smaller size of these conflicts and the absence of western involvement force them under the media's radar and the public's attention. With Iran likely less than 4 years away from nukes, the next administration's stance on the issue will be capital to the world's survival, as we know it.