WILLISTON — Bakken shale looks like black marble, and marble, as we all know, releases no oil. For a long time, most industry experts believed that Bakken shale was a lot like black marble. It would forever be too expensive to draw out the solid Kerogen materials and create from it flowing black gold.
Stephen McNally, 25 years ago, would have been one of those naysayers. He would have said with confidence, never.
Thursday night, however, he was one of four speakers at the MonDak Energy Alliance meeting, talking about the state of all things energy, and particularly Bakken oil, at the Grand Williston Hotel.
McNally is the general manager in North Dakota for Hess Corp. He has more than 30 years experience in oil and gas exploration, development and production.
The alchemy that made the Bakken boom possible was the value of the prize hidden in the earth, which ultimately inspired the intellectual capacity of the industry.
"What's happened here has been a miracle," McNally said, adding that plenty of that prize still remains in the ground. "The industry will go after that. There's going to be a long future here of oil and gas development."
Hess said its company would have reduced its rig count even without the drop in oil prices because its become more efficient in the extraction process.
It invested $2 billion last year in the Bakken, and plans another $1.8 billion this year.
"That should give you an appreciation of our view of the asset here, and where we think oil prices will be in the future.” McNally said.
Right now, the company is down to 9.5 operating rigs and has 1,000 wells, but is positioning itself to drill more than 4,000.
"The bottom line is we are investing in infrastructure so we will be prepared as the oil prices go back up," he said. "We are going to be able to ramp up very very quickly."
McNally said there are some things Hess Corp. would like to see the state do.
"I was in Bismarck the other day for the surge funding," he said. "Our view is, we hope the state continues investment in infrastructure, just like we are doing. We are spending almost $2 billion. We are putting our money where our mouth is."
McNally said he has been commonly asked his opinion on how long the oil prices will stay down.
"Will it be six months or two years? Who knows? Let me give you an opinion, but whatever I say, it will be wrong,” he said. “We think oil prices will change no sooner than six months, but probably in two years. And let me reinforce that my prediction will be wrong."
Dennis Haider, executive vice president of business development for MDU Resources Group, Inc., talked about the investments his company is making in the area.
MDU started in Montana 91 years ago. Growth before the Bakken boom was slow, so the company diversified, and as a result has a presence in 44 states. Among projects he mentioned, $60 million is being put into Bakken electrical and $50 million is going into Sidney operations, some for pollution control equipment and some for gas generation.
There's a $4 billion ethane processing facility on the horizon, although Haider couldn't say where the plant will be located just yet.
He also mentioned a sizable project that's going in north of Seattle.
"There are refineries there expanding to handle more Bakken oil," he said. "It kind of seems we're all part of the growth and it touches a lot of different areas."
Cindy Sanford, with Job Services North Dakota and Cory Chorne, with Western Area Water Supply also spoke at the event. For their comments, see the related article link at right.