There's a red-hot horizontal drilling play in full steam in the Williston Basin, in the Bakken Shale. That's not a typo, and this is not 1988. Of course, horizontal drilling and the Williston Basin have long been closely associated. Anyone with a passing familiarity with the technology is aware that the Upper Devonian/Lower Mississippian Bakken formation was an early target of horizontal drilling. Indeed, some 30 million barrels of oil were produced from horizontal wells that were drilled in the late 1980s and early 1990s in the upper, shaley member of the Bakken, mainly in Billings, McKenzie and Golden Valley counties, North Dakota. The thin, organic-rich source rock seemed a perfect application for horizontal wellbores, given the idea that the laterals would intersect a great number of the fractures that naturally dissected the shale. The bloom didn't stay on the rose for long, however. Horizontal Bakken wells were largely disappointing, as the volumes of oil that could be recovered from each well were often smaller than expected. The play withered completely when oil prices fell well below $20 per barrel. The natural fracture systems that supplied the Bakken's permeability were just not widespread enough or predictable enough to support a commercial play. The wheel has turned around, however, and today horizontal Bakken wells are again in the news. This time, the focus is in Richland County, Montana, on the western flank of the broad Williston Basin. And, the zone of interest is a middle member of the Bakken that is a silty dolomite. Astoundingly, more than 3.4 million barrels of oil have already been produced from this play. At press time, 10 rigs were active in the Bakken in Richland County, and more than 80 horizontal wells have already been drilled. Even so, the play has largely happened below the industry's awareness, as the core participants are privately held independents. These are the folks who don't talk at investment conferences, don't issue press releases and generally keep their businesses close to their vests. What they are developing is a tremendous stratigraphic trap in the middle Bakken dolomite, an accumulation that occupies a northwest-southeast trend some 60 to 70 miles long by 12 to 15 miles wide. The reservoir, which is sandwiched in source rock, is between four and 15 feet thick and occurs at depths from about 8,400 to greater than 10,000 feet. Its porosities range from 7% to 12%, and its permeabilities are around 0.01 to 0.02 millidarcies. Oil saturations are between 70% and 80%. New economics Dallas independent Lyco Energy Corp. is credited with launching this sleeper of a play. The firm had a history in the Williston, and had been working Ordovician Red River prospects there off and on since the late 1970s. In the mid-1990s, a geologist, Dick Findley of Billings-based Prospector Oil Inc., and Bob Robinson, a landman with Traverse City-based Kelly Oil & Gas, approached Cosco Capital Management LLC to help secure financing to pursue a vertical Bakken play in Richland County. The partners had drilled a well to test the Devonian Nisku, but completed it uphole in the middle member of the Bakken after noticing a drilling break and significant oil show in that zone. "The well was fairly good for a vertical Bakken well," says Findley, "and we decided to see where we could take it." The area was scattered with vertical Bakken wells, as well as with a number of Red River dry holes. "We mapped the middle member, and soon recognized that it was a large, regional accumulation, certainly much bigger than we could handle ourselves." Cameron Smith, senior managing director of New York-based Cosco, introduced Findley and Robinson to Bobby Lyle, chairman, president and chief executive officer of Lyco, for which Cosco had just completed a successful financing. "We were familiar with the area, and we knew the Bakken as a bailout zone," says Lyle. "We felt that with the right kind of stimulation there was an opportunity to make commercial wells in the Bakken." Lyco also brought to bear its considerable experience with the Codell and Niobrara formations in the Denver-Julesburg Basin of northeastern Colorado. "We thought we saw some similarities in concept, with the need to pay close attention to drilling costs, as well as completion and recovery techniques, in order to develop a commercially viable play." After an initial success with fracture stimulation in a vertical Bakken well, Lyco identified a number of additional abandoned wells that could be reentered and commenced its recompletion program. "Our wells were, on average, better than the typical Bakken wells in the county, but the economics were not good enough to justify drilling new wells." The company dug into research and modeling, and concluded that horizontal wells were the way to move the play forward. Undeterred by the checkered history of Bakken horizontals, Lyco designed a pilot lateral well. It also hooked up with Halliburton's Integrated Solutions group. The two firms spent several more months researching the Bakken, modeling alternative drilling and completion techniques. In 1998, they were on the verge of drilling their first horizontal test when oil prices began to plummet. More study ensued, which reaffirmed the soundness of the project. Finally, in March 2000, Lyco spudded its first lateral Bakken well in Montana. It drilled a 1,600-foot horizontal section in its #36-2H Burning Tree State, in Section 36-25n-54e, and was pleased with its initial natural potential of 196 barrels of oil and 85,000 cubic feet of gas per day. After fracture stimulation, the performance of the well improved materially, exceeding Lyco's expectations. A second well was drilled in December 2000, and the play was under way. "We've been drilling continuously since then, first with one rig and then with two," says Lyle. "We're going to bring a third rig into the field in mid-April." Indeed, the company has just completed its 35th well. With 100,000 acres under lease, Lyco expects to keep the three rigs busy for some time. "We continue to experiment with different drilling and completion techniques," he says. "In this regard, the relationship with Halliburton has proven to be extremely valuable as we develop best practices for our operations." Lyco, in fact, now holds the record for the longest lateral drilled in Montana, a 9,200-foot horizontal wellbore. "It's an exciting play, and we're still learning about it." Prolific wells The other dominant firm in the play, Headington Oil LP, also hails from Dallas. Headington has drilled 30 horizontal wells in the Bakken in Richland County to date, and is currently running three rigs. "We may pick up another rig as well," says Al Powell, Denver-based operations manager. At the same time Lyco was in the midst of its Bakken investigations, Headington was actively drilling wells in the nearby MonDak area, on properties it had acquired in 1997 from Coastal Oil & Gas Corp. "We had recompleted some vertical Bakken wells and felt that the zone was a perfect candidate for horizontal work," says Powell. After Lyco's first few horizontal wells were completed, Headington jumped into the play. "We developed a completion system that makes the Bakken wells commercial. That's the secret of the play-how the wells are drilled and completed, and especially the completion frac system." Headington drills its wells as dual laterals of 4,000 to 5,000 feet each, then fracture stimulates them with 650,000 to 1 million pounds of sand. A completed well costs the company about $2 million. "There's no question that the improvements in horizontal drilling technology have made this play possible," says Powell. "The tools are so much better today, and we can guide the wells so much more accurately." These are some marvelous producers: The average well initially makes 500 to 700 barrels of oil per day, and will stabilize at around 250 barrels per day after a few months. "We also have several wells that have initially made 1,200 barrels per day, and one that made 1,500 per day," says Powell. Furthermore, the oil is sweet, high-gravity crude with very little paraffin and virtually no water. And, as the Bakken is geopressured and there is a fair amount of casinghead gas, some wells will flow for many months before they have to be pumped. Whiting Petroleum, a newly public company based in Denver, is participating in several horizontal Bakken wells operated by Headington. Whiting is in a five-well program in the Red Water Field area, in which it owns a 40% interest. It expects these Bakken wells to have gross estimated ultimate recoveries of some 700,000 barrels of oil apiece. Whiting is quite interested in pushing the Bakken play back into its original area on the North Dakota side of the basin, where the company has a good land position. There, the Bakken Shale has very high oil contents, but it lacks the middle silty dolomite member, says Mark Williams, Whiting vice president of exploration and development. "One of the problems with the North Dakota wells was that the fractures tended to close as the wells were produced. The key is to find a way to keep the fractures open, and we think that refracs might represent a way to accomplish that." Whiting plans to try a number of stimulations on some of its 38 existing horizontal wells in that area. "It's not one of our main projects, but it is certainly something that we think will be economic, and we have a lot of running room there." More operators Other operators active in the Bakken include Houston-based Burlington Resources and EOG Resources; Continental Resources, of Enid, Oklahoma; Nance Petroleum Corp. of Billings; and Petro-Hunt, of Dallas. Presently, there are around 70 locations staked in Richland County, and the play appears to be large enough to eventually support hundreds of wells. Wichita, Kansas-based Slawson Exploration Co. has also assembled an acreage position in the Bakken play. It has brought in American Oil & Gas Inc., a Denver-based independent, as a 20% partner in a project it calls Big Sky. Privately held Slawson was active in the original Bakken horizontal play, says Todd Slawson. Between 1989-91, it drilled 21 horizontal wells in Billings and McKenzie counties, North Dakota. Slawson was quite aware of the Montana extension of the play: "In 1991, we had a large land option in the heart of the Richland County play. We-and others-saw the high oil saturation, and a couple of horizontal wells were drilled there in the upper Bakken Shale." Those wells were disappointing, however, and they didn't generate excitement at the time. When the company decided to reestablish a position in the Rocky Mountain region after a decade of gas prospecting in California's Sacramento Basin, it went back to Richland County. "We were very familiar with the first Bakken play, and we knew what it would take to be successful." Slawson believed technology would continue to improve, and better and better wells would be drilled for successively less money. It had already experienced that cost efficiency in the original Bakken play, in which its first wells were drilled for $1.5 million and its later wells, for $800,000 apiece. "Companies will find ways to improve the economics with a big, blanket oil play like this, and that's what has happened here." The company notes several differences between the two incarnations of the Bakken play: the Richland County laterals are drilled with saturated brine in the underlying silty dolomite in the middle Bakken, while the original horizontals in North Dakota, where the Bakken is higher-pressured, were drilled with heavily weighted mud in the upper shale itself. Today's wells are fracture stimulated, whereas the older wells were dependent upon finding natural fractures and stimulations were generally not attempted. Also, the Montana wells are commonly drilled as dual laterals, with some operators not even running casing in those laterals. These techniques were not used in North Dakota. "So far, there haven't been any uneconomic wells drilled in this play, but there were a few in the North Dakota play," says Slawson. This year, the company plans to drill five wells, and to participate in another five nonoperated wells. "If our acreage proves up, we'll drill 20 to 27 operated wells during the next three years, and also be involved in another 30 outside-operated wells." Its first well will spud in mid-May. "This is the largest conventional oil play I've experienced in my career," he says.