Salazar: Drilling and conservation can go hand in hand

Interior Secretary Ken Salazar got a close-up look at oil drilling in the booming Bakken formation Monday and Tuesday, as his department rolls out new programs to speed up processing of permits for the work.

During a two-day energy tour of North Dakota, Salazar visited temporary housing for oilfield workers that have swarmed the state and checked out a rig drilling a well for The Woodlands, Texas-based Newfield Exploration Co.

Salazar said the visit gave him a chance to witness firsthand the oil boom that has brought thousands of jobs and royalty revenue to the state.

“For me, what is really incredible about the Bakken (is) . . . how it has become Ground Zero for oil and gas production,” Salazar said in an interview Monday. “This is really the new Saudi Arabia of the United States. It’s a world-class play for oil and gas.”

Salazar’s trip came as the Obama administration seeks to emphasize the recent growth in domestic oil and gas production while assuaging motorists concerned about rising gasoline prices.

On Tuesday, while at an Indian reservation in the state, Salazar touted new automated tracking systems for managing lease sales and monitoring applications to drill wells on public lands that could pare processing time down to 60 days from nearly 300 now.

He was joined by North Dakota’s congressional delegation: Republican Rep. Rick Berg, Republican Sen. John Hoeven and Democratic Sen. Kent Conrad.

At Newfield’s drilling site, the company is working on two wells, with the expectation that they will initially produce 2,000 to 3,000 barrels per day of oil. That’s a common stat in the Bakken formation, compared to 1,000 barrels per day for most wells in Texas’ Eagle Ford.

A Nabors rig is currently drilling the first well; after it is done, the rig will slide over and drill another. Using horizontal drilling techniques, Newfield workers are steering drilling pipe to a location two miles down and two miles away, keeping inside a target zone that is just 10 feet thick.

The drilling will be followed by hydraulic fracturing, a process in which high-pressure water, rock and chemicals are pumped into the formation to crack it and release oil and gas.

The whole process — both drilling and completion — will cost roughly $10 million to $11 million, Newfield officials said.

Salazar was curious whether North Dakota’s conservationist roots were being complemented – or upset – by the oil boom.

Newfield Vice President John Jasek highlighted the relatively small footprint of the drilling going on in the Bakken formation. Several wells may be drilled on a single pad, with laterals going far out. “We can use longer laterals to minimize our footprint,” Jasek said.

Jamie Connell, the Bureau of Land Management’s state director for the Montana and Dakotas region, said drilling in the Bakken has a lower profile than activity in Colorado. Open mud pits that were common in Colorado have been replaced by closed-loop systems and contained pits in North Dakota.

And while there has been an occasional push to put wells out of the sight lines of roads and residences, in the Bakken there’s a growing understanding that if wells are drilled near roads, that can mean less disruption to wildlife.

Salazar said a conservation ethos and a commitment to oil and gas development can go hand in hand.

There is a “huge connection” between the two, he said, because oil and gas drilling — particularly offshore in the Gulf of Mexico — has delivered royalty revenue to the federal government that is used for conservation and recreation programs. A portion of offshore revenue from drilling in the Gulf of Mexico is dedicated to those efforts.

Salazar’s Interior Department is preparing to propose new regulations governing wells drilled on federal land. Currently 90 percent of them are stimulated using hydraulic fracturing.

The rule, which could be unveiled later this month, is expected to include new mandates governing well design and integrity, as well as requirements for companies to disclose the ingredients of the frac fluids they pump into the ground.

Salazar said the Obama administration supports hydraulic fracturing “as a technological positive that has allowed us to move forward with the kind of robust oil and gas development that we’re seeing all across the country.”

But, he warned, concerns about environmental problems from fractured wells, could jeopardize public support for the activity.

“Our hope is that by approaching hydraulic fracturing in a way that creates confidence among the American public, it won’t become the Achilles heel to the oil and gas industry,” Salazar said.

He pledged the rule would be a set of “common-sense” requirements.

North Dakota’s oil boom has been a mixed blessing. Although it is bringing thousands of jobs into the state — which had the nation’s lowest unemployment rate in February — it also has strained local infrastructure and caused area housing prices to skyrocket.

The rising price of rent — as well as everything from groceries to furniture — is pricing some local residents who don’t have jobs in the oil industry out of the market, including federal government workers who regulate the industry.

Hoeven and Conrad said it was valuable for Salazar to see the area’s needs firsthand.

Conrad said he knew an elderly couple that moved across the state because they could no longer afford to live in the boomtown that is much of western North Dakota. And he pointed out other headaches that have come with the surge in drilling — including a rising crime rate and damage to local roads from heavy, water-bearing trucks.