Bruce Gjovig: Innovation is driving Bakken oil
By Bruce Gjovig
The North Dakota Petroleum Council is hosting a Bakken 2.0 Conference at the Alerus Center this week. They will highlight that innovation is driving the Bakken.
Innovation, at its core, represents the process of developing breakthroughs that better our lives. Innovation occurs in small increments, big leaps and a combination of the two. Frequently, we don't recognize innovation's impact for years after it takes effect.
We haven't fully realized the remarkable impact that innovation in the Bakken has had on our state, country and world. Less than 12 years ago, this amazing oil technology was not fully proven; not a single well had been successfully drilled in the Bakken formation — and the Permian and Eagle Ford — the Bakken's competitive cousins in Texas — were years away from discovery. Truly, it was here in North Dakota that the shale oil boom began.
During the boom, we measured the innovation in barrels, truck counts, population gains and tax revenues. A slowdown in the boom seemed to some as a bust. Too many forgot we still have 10 times or more of the economic activity, jobs and tax revenues from the oil and gas industry that we did in 2005. That is no bust. That was a breather to catch up.
Most tend to blame OPEC for price declines, as if they caused the spike in oil output — which they did not. The truth is non-US production has generally decreased over the past decade.
Rather, it was innovation in American energy that grew production to 9.5 million bopd, up nearly 50 percent in four years, and drove down both producer and consumer prices. During the downturn, the world produced about 1 million bopd over consumption (roughly 97 million bopd vs 98 million bopd) which recently dropped to a 0.5 million bopd shortage.
If you take the shale rock stars — Bakken, Permian, and Eagle Ford (total of 5.0 million bopd) — out of the picture, the US produces more than 1 million bopd less than it did a decade ago and the world would find itself short of 4.5 million bopd or more today. Without the Bakken's innovation, oil and gasoline prices would be at sky high levels. We are only tapping into 8 to 10 percent of the oil in the shale — which is three times what it was six years ago. Who will discover the innovation that increases that to 15 or 20 percent oil recovery?
North Dakota has been a leader in agriculture technology since the 1870s, starting with the Bonanza farmers and homesteaders. World-class electronics and sensor development in agriculture has kept our farmers the most technologically advanced in the world — a competitive advantage. As promising is the emerging UAS industry, which offers significant opportunities for innovation to cost-effectively inspect farmland and energy infrastructure to increase productivity more safely. This is a competitive advantage through innovation.
Innovation relies on exploration, entrepreneurs and sharing of ideas between key people. Grand Forks is fortunate to host some of the greatest minds, innovators and entrepreneurs in Grand Forks at the Bakken 2.0 Conference. The North Dakota Petroleum Council's annual meeting was a free public event on Tuesday. Everyone is invited to attend the conference, and there is open registration for its Wednesday and Thursday events.
We all can learn how the oil and gas industry will continue to innovate, where opportunities lie, and how American innovation and capitalism continually make this world a better place to live.
Bruce Gjovig, is CEO Emeritus of the UND Center for Innovation Foundation, and was an early leader in encouraging business owners in the Red River Valley to engage in the Bakken economy in western North Dakota.