HARDING COUNTY — South Dakota auctioned off some 67,000 acres of public land in Harding and Butte counties earlier this month — one of the largest oil based public land sales in the state's recent history. One hundred and eighty six of the 189 lots were scooped up by Bedrock Oil and Gas of Boerne, Texas. Could this mean the state is on the edge of a North Dakota-like oil boom?
At this point the most responsible answer is “maybe.”
Bedrock Oil and Gas have chosen to keep their intentions to themselves at this point. But they certainly didn't buy all that land for a hunting ranch.
“Basically I view the land lease by Bedrock as a speculative kind of activity,” said South Dakota State Geologist Derric Iles.
Iles says there are a number of geologic units buried under the northwest corner of the state that contain unexplored potential. One of these is the Minnelusa formation, which North Dakotans call the Tyler formation. Same rock unit, different name.
“The Tyler (Minnelusa in South Dakota) formation is one of the units most recently shown to be productive, regarding hydrocarbons, in North Dakota,” Iles said. “Parts of the Minnelusa are shale, like North Dakota's rich Bakken and Three Forks formations, which are largely responsible for the state's number four ranking in domestic oil production.”
The Bakken and Three Forks formations are also responsible for North Dakota's nearly $1billion budget surplus and 3.5 percent unemployment rate, the lowest in the country.
Iles explained that nearly all the geologic formations at the source of North Dakota's tremendous oil and gas related economic boom also underlie northwestern South Dakota. But he was quick to point out a fundamental difference between those formations as they lie in South Dakota and the very same formations in North Dakota, Montana and Canada.
“Those states have the deeper portions of what we call the Williston Basin. As you come into South Dakota all the rock in it has become progressively shallower,” Iles said. “Almost without exception the necessary testing of these shallower rock units has not occurred, therein lies our unexplored potential. Any exploratory effort, let alone any effort to produce oil, is an expensive endeavor. Just to explore it will cost some considerable dollars.”
Exploration. In all likelihood that's what's going to go down on Bedrock's new land. The Texas company won't confirm it, if indeed that is their plan. But Randy Coleman, landman for Bedrock, did confirm two things, one: that exploring for oil isn't as easy as it looks on the “Beverly Hillbillies” and two: that his phone has been ringing off the hook since the Associated Press ran an article on Bedrock's purchase late last week.
“People are just flipping out, they need to catch their breath and just let this thing kind of evolve. It takes time to drill for oil and gas, it just doesn't come popping out everywhere you put a hole in the ground,” he said. “You won't know (what's under northwest South Dakota) until you have exploration people, who I represent, do the follow up work.”
That follow up work would include collecting and interpreting seismic reflection data to look for potential trapped hydrocarbons and, if the data appears lucrative, drilling exploratory holes.
“I was with Texas Gas and Oil in 1980, and what we're talking about right here, we did the same thing back then,” Coleman said. “What we called it back then was 'trend acerage.' In other words, you just kind of have a geological idea in a geologist's head. And with that you just go out and ‘buy the whole world’ kind of thing with nothing to back it up, thinking that somewhere along the line you're going to come back, shoot some seismic, do some well control and put some prospects together. It's no different now than it was in 1980.”
Coleman did offer that Bedrock Oil and Gas is an exploration company “that has the capability and expertise to prove up any basin on the face of the earth.”
Iles stressed that he and the state geological survey were uncertain as to exactly what's under the surface of the land Bedrock purchased as far as hydrocarbons were concerned.
At this point any oil and gas exploration in the area is just as likely to yield a boom as it is a bust.
“What you're looking at is, you saw a successful state sale that stimulated a little bit of the economy of South Dakota,” Coleman said. “We're at the embryonic phase of an exploratory effort and people ought to just catch their breath until somebody goes in there and drills some wells. I hope that South Dakota turns into something similar to North Dakota, because it's really helped out some good people to make a living.”
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