According to analysis presented to the Board of University and School Lands, the oil and gas mineral rights owned by the State of North Dakota are worth more than $2.8 billion. The estimated was prepared by MineralTracker, which is a division of First International Bank & Trust in Watford City.
Minerals Services Manager Joel Brown told Land Board members it represents about a $420 million increase over the previous year, largely driven by higher prices for oil and natural gas. Brown said estimated oil reserves were relatively similar to previous reports, but natural gas production numbers were adjusted upward as the gas-to-oil ratio in the Bakken continues to rise.
The analysis divided the state’s reserves into six different categories, ranging from wells that are developed and producing, to reserves that are known to exist but are unlikely to be developed given current economics.
“Proved Developed or Non Producing or PDNP represents wells that have some amount of capital investment to the actual development of the well,” Brown said. “This would be your DUCs, your wells that are being SPUD, wells that are in the process of being completed right now but we haven’t yet seen the first barrel of oil or the first cubic feet of gas yet being produced from those wells.”
Brown added there are other potentials for future undeveloped wells.
“Your permits that are out there, what we expect to take place in the in-fill of the Bakken and Three Forks for the majority of what we are looking at,” Brown said.
He added that the distinction between proved, probably and possible are based on the “likelihood that those reserves actually come to fruition.”
Brown said one other contributing factor to the increasing value of the state’s mineral assets is the significant improvement in drilling and completion technology in the past decade.
“First off we do have quite a bit of drilling to be left in the Bakken before our initial phase of development is done drilling in the Bakken Three Forks,” Brown said. “The recovery that we are seeing from new wells being drilled in the Bakken are so significantly than what we had experienced in the early phases of development that we are seeing areas outside the core of the Bakken that have traditionally not been as productive are seeing results greater than what the core was showing during the height of the boom in 2010-2014.”
Brown estimates the state will realize more than $10 billion in royalties in the coming decades, as well as billions in extraction and production tax revenue.
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