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Halliburton Company (HAL), Continental Resources, Inc. (CLR): The American Oil Renaissance Begins

On this day in economic and business history…

The Bakken oil boom, upon which so much of the United States’ domestic energy revival depends, is popularly thought to have begun in the latter half of the 2000s. Improved drilling technologies, particularly hydraulic fracturing, have brought more oil to the surface of this North Dakota-centered formation than had ever been thought possible. However, without an initial discovery on April 4, 1951, the Bakken formation might not have been tapped at all.

Halliburton Company

Historian James Key recounts the efforts that led up to the Bakken’s first successful well:

About 40 miles east of Williston, a small town or village known as Nesson became the visible reason that the principle feature in the Williston Basin became known as the Nesson Anticline. Between 1924 and 1951, there were 23 serious attempts at the discovery of oil. Plans for drilling what was to become the “discovery” began in 1946. It was through 1949 that the leases were acquired by two men, Thomas W. Leach and A. M. Fruh. These leases were assigned to Amerada Petroleum Corp [now Hess Corp. (NYSE:HES), after a merger in the late 1960s].

The well was begun on the Clarence Iverson farm south of Tioga in August, 1950 and was a novelty and curiosity to residents in the area. Drilling became routine and skeptics scoffed, particularly since the closest supply company was located more than five hundred miles away at Casper, Wyoming.

The year 1951 came in with a snowstorm. January 4, a pint of oil was recovered at the Clarence Iverson farm. Drilling continued. The bits had now dug to the depth of 10,500 feet. Weather shut down the operation and snow clogged the roads. Operations resumed on April 4, 1951. About 9:30 p.m. on April 4 a new industry was born in North Dakota. The Clarence Iverson became the discovery well of the Williston Basin.

This was the first major discovery in a new geologic basin since before World War II. Williston, the county seat, felt the immediate impact of the petroleum industry’s beginning operations.

By May 20, thirty million acres of North Dakota were under lease. This was accomplished in 45 days — just think, 30 million acres leased out of a total 44.8 million acres in all of North Dakota!

It would be nearly to 1953 before the region produced its millionth barrel of oil. By comparison, the Spindletop gusher — which marked the start of the American oil boom in 1901 — had shot nearly as much oil out onto the Texas plain in less than two weeks of uncontrolled production. The slow pace of North Dakota extraction didn’t deter major producers from swarming the region. In addition to Amerada Hess, Texaco (today part of Chevron Corporation (NYSE:CVX)), Stanolind (today part of BP plc (ADR) (NYSE:BP)), and privately held Hunt Oil all moved in to acquire big leases and set up operations.

Hydraulic-fracturing technology had been developed for Stanolind by Halliburton Company (NYSE:HAL) two years before the Bakken discovery, but it was not until recent years that horizontal-drilling technology enabled the recovery of tight oil from the Bakken shales. The Minneapolis Fed now calls the Bakken boom “five times larger than the oil boom in the 1980s,” and data makes this shockingly clear: North Dakota produced roughly 2.5 million barrels of oil per month in 2002, but nearly 24 million barrels of oil flowed from the state a decade later. Continental Resources, Inc. (NYSE:CLR) took the lead in North Dakota production with 19 million barrels extracted in 2011, although EOG Resources Inc (NYSE:EOG) was more concentrated in the Bakken itself, with 16 million barrels produced from that region compared to Continental Resources, Inc. (NYSE:CLR)’s 13.5 million.

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