Federal officials estimate an oil field known as the Bakken Formation in North Dakota and Montana has an estimated 3 billion barrels of recoverable oil that hasn't been found.
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For the U.S. Geological Survey, the latest estimate dwarfs an earlier one by 25 times, made for the same field just a dozen years ago.
The revision was possible because of new geologic models applied to the formation, advances in drilling and production technologies and recent additional discoveries of oil.
Federal officials add that their Bakken estimate is larger than all other Geological Survey assessments of the lower 48 states.
The news, released this month by the Geological Survey, doesn't surprise an Oklahoma company operating there since the mid-1990s. Enid-based Continental Resources Inc. has operated in the field for more than a decade, completing more than 170 horizontal wells there during that time.
"The Bakken has been overlooked for a lot of years,” Continental Chief Executive Harold Hamm said Monday.
Hamm said the industry had identified the area as a source rock for oil.
But the challenge, he said, had been in unlocking the secret of how to get the oil out of its shale.
Continental Resources, he said, helped discover what works. There, the hole must be drilled deep, then drill horizontally one mile in one direction and then another mile in another. Then, once the well is drilled, it must be fractured to keep fissures open in the rock.
The field once was thought of as a fall-back area, with traditional vertical wells that would make a little money. In 2003, Continental Resources went into a dry hole and took the well horizontal and made some money.
"It wasn't a barn burner, but it got us started,” he said.
Today's horizontal wells are capable of making money, Hamm said.
"I think this report is right on,” he said of the Geological Survey's findings. "We realize there is a huge number of barrels in place.”
And Continental Resources finds itself in a good position, he and other company officials said, because it has 340,000 net acres in North Dakota's part of the field.
This year alone, Continental Resources is spending $55 million to drill in Montana's part of the field, and $125 million on the North Dakota side.
The company has potential, unbooked drilling locations of 384 in North Dakota, and estimates its net reserves there are at least 256,000 barrels of oil equivalent.
Curtis Trimble, an investment analyst at Natixis Bleichroeder who follows Continental Resources, said it is pretty difficult to find a company exploring for oil in the lower 48 states with the kinds of growth potential that Continental Resources enjoys.
Part of the reason, he said, is that not that many new large oil fields have been discovered. He said per-unit recovery costs for oil typically are higher than they are for natural gas wells, too.
But because Continental Resources has been working in that field since the mid-1990s and working with the same drilling operators and well services companies, it has had time to get inefficiencies out of its process.
Another issue working in the company's favor, he said, is that it put a lot of oil it found in the field into storage when prices were low — in part because there wasn't really a way to get the product out of the area.
Now, that bottleneck is nearly gone, and the company is able to take that stored oil and sell it on the market, Trimble said. He also reflected on the government report, which estimates the substantial growth in potential reserves from the field.
He said that report, along with production numbers from other companies operating in the field, gives Continental Resources a bright future.
"It is an affirmation that the resources the company has in place there are substantial,” Trimble said.
Continental officials, meanwhile, said they want the public to know that independent companies like theirs are responsible for growing domestic oil supplies in the continental U.S., not "big oil” companies frequently demonized by Congress.
"For the past 15 years, independents have drilled far more wells in the U.S. than anyone else,” Hamm said. "We need to be telling that to a lot of people.”
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