Lynn Helms on the Oil Boom: “It is a world game-changer.”
Introduction: Lynn Helms worked for Texaco and Amerada Hess (now Hess Corporation) before becoming North Dakota’s chief oil and gas regulator in 1998. He is Director of the Department of Mineral Resources of the North Dakota Industrial Commission. Terry Evans photographed – and I interviewed – him in Bismarck on August 31, 2012. Updates to some questions, which he answered last week via e-mail, follow the main text. I have added italicized information in brackets when necessary for clarity.
Elizabeth Farnsworth: How much oil is in the Bakken and how much is recoverable?
Lynn Helms: Our numbers show 500 billion barrels in place total, 300 billion of that being within the boundaries of the state of North Dakota. We see somewhere between 7 and 15 billion barrels recoverable in North Dakota.
EF: What does it feel like to be riding this wave?
Helms: It’s always exciting and sometimes terrifying when you look at the amount of work that has to be done to accomplish this task, and you see that all of your employees have been working as hard as they possibly can for at least two years, and that that level of effort has to be continued for another 16 to 20 years.
EF: How old are you?
Helms: I’ll be 56 next month.
EF: How many hours per day are you working?
Helms: Mrs. Helms would probably be a better source of that, and she thinks I average 60 hours a week.
EF: You’ve called this a world-changing event. Why?
Helms: The Bakken is the first successful shale oil play. And we have to make the distinction between oil shale and shale oil. Oil shale is the stuff that’s on top of the mountains in Utah and Colorado, which is not thermally mature, and we have to cook it in an oven to make it into oil. That’s oil shale. Nature has turned shale oil into oil, and we’ve just figured out the technology to extract it. The Bakken really is the first place that was done. What we’ve done has gotten the attention of people from France, Poland, and Russia – in the Siberian regions. We’ve had visitors from Australia, Alberta, and Alaska. Almost anywhere that they have a shale basin, they’re eager to learn how we’re doing shale oil. So, it is a world game-changer.
Before I did a big natural gas project with Hess [Hess Corporation, formerly Amerada Hess], much of my work was centered around trying to get vertical wells to produce oil from the Bakken – from numerous old Hess wells that I worked on, completed and hydraulically fracked in the early ‘90s in an attempt to make them produce oil. They always produced oil but never at commercial rates – so it was incredibly gratifying when this technology came along and sort of affirmed all those efforts.
EF: Is it true that Harold Hamm and Continental Oil were first in making it work?
Helms: They were the first to make it work in North Dakota. They were kind of second to the Montana play, which was originally put together by Lyco and Halliburton, where the Halliburton Corporation wanted to partner with Lyco and try hydraulic fracturing in combination with horizontal wells. But the technology they developed there wasn’t successful in North Dakota. So Harold brought it to North Dakota and adapted it and was on the cutting edge. He was the inventor of how we do things in North Dakota, and several innovations along the way.
EF: Have you ever been to Joyce and Fred Evans’ place in the Little Knife River Valley?
Helms: Several times, yes.
EF: If you turn in to the dirt road [leading to their ranch from Highway 8] there are many wells. They’re fairly close together.
Helms: Yes. They [Whiting Petroleum Corporation] drilled that first line of wells, and they’ll be drilling the second line of wells. If you went and talked to their operations people here on the ground, they would share with you that, if they had it to do over again, they would use multi-well pads. What you would see, instead of that row of wells, is half as many pads or a fourth as many pads. And each well pad would have probably four pumping units on it.
EF: You said on TV last night that you’re going to permit 14 pumping units on one pad.
Helms: Correct. We have already permitted a 14, and next month’s docket has some cases for 18 units. So we continue to learn something new as we go. That will be a bit overwhelming, too, as you come over the hill and see a “North Dakota 18.” [As of April 8, 2013, no 18-unit pads had been granted permits.]
We’ve got some pads with six pumping units side by side. The pad is larger, although nowhere near incrementally. So for example, the single well pads that you saw in Fred Evans’ valley – those are four or five acres each – so if you took that to a 14-well pad, you’d be using 70 acres, but we’re not. We’re using 20.
EF: Why are you allowing flaring of gas close to homes? [An oil well and its gas flare can currently be located 500 feet from a home.] We know a family with a pad 800 feet away where a gas flare has blown out several times. If the wind is coming towards them when the flare goes out, they have to move animals and leave their house.
Helms: The law was set by the Legislature – the 500-foot distance – so, we’re really very constrained on both sides by the law. We always try to lean towards safety and towards the general public, but we are constrained by the law in terms of what we can demand of the oil companies, and that is one of the constraints that we operate under.
That should not happen. There is supposed to be an automatic igniter on every one of those flares, and they are never supposed to go out, but we do recognize that all mechanical systems fail and all people make mistakes.
EF: Until you get all the gas captured, there’s no way to avoid flaring close to people’s homes?
Helms: The law can be changed you know. [See update below.]
EF: Do you have any estimate of how much agricultural land has already gone to oil and how much will be lost in the future if you get up to 45,000 wells?
Helms: I don’t think we’ve ever calculated that number.
EF: Are you worried about losing prairie?
Helms: The answer to that would be yes. For the first three years of drilling, we pretty much allowed oil companies to lay out the well spacing and the well pads based on their ownership and how they wanted to develop the Bakken and Three Forks [a formation just beneath the Bakken]. But at that point – about the fourth quarter of 2009 – we were sitting at about 1,500 – 1,700 Bakken wells, and we realized that the play was more enormous than anybody had ever thought. This was one of those wake-up-in-the-middle-of-the-night sorts of things. Then in December of 2009, Brigham drilled the Williston well and all of a sudden it’s a 16,000-square-mile oil field that we have to develop, not multiple oil fields on different patterns.
So, I sat down with my staff and said, “We can’t play Tetris with people’s farms and ranches and minerals for the rest of our career and have minerals stranded and have well pads everywhere and consume all of the gravel and scoria in our two states and two provinces and all of that. We can’t have 45,000 reserve pits.”
We just can’t do the next 43,000 wells the way we did this first 2,000. And so, we decided to rationalize the whole play. We held a hearing and tried to gather as much consensus as we could from the oil operators, and then we issued a single order that reorganized the entire Bakken oil field – whatever wasn’t already drilled – into north-south 1,280’s, so that it could be developed from east-west road corridors two to four miles apart from multi-well pads. [According to Alison Ritter, press assistant to Lynn D. Helms, “The majority of Bakken and Three Forks wells are permitted and drilled to access minerals included in a 1,280 acre spacing unit. That’s two sections of land that are typically organized on top of each other (north/south) and called stand up 1,280’s. They can be reoriented if need be, to lay down 1,280’s (east/west) to avoid sensitive or critical habitat areas.”]
Now you have your power lines and pipelines and hugely built-up roads spaced two to four miles apart and running east and west. And if you live right along one of those roads, life changes permanently, but the development has to go somewhere. The ideal is to get them four miles apart. That’s our real goal.
EF: You can go four miles now?
Helms: Well, what we do is we put the well heads four miles apart and we put the toes of the wells together in the middle. So then you have four miles of undisturbed land between the rows of wells.
EF: What’s the “toe” of a well?
Helms: That would be the far end, so the heel is where the well makes the curve, and the toe is out at the far end.
EF: Ranchers and farmers we’ve spoken to have complaints about many aspects of the oil boom. I already mentioned the flares. A 94-year-old woman thrilled about oil income said she would never return permanently to her farm now because of the noise and disruption from a well on her land.
Helms: I think a fair amount of the grief that you’re hearing comes from some of the earlier times in the Bakken development, and there were things that happened that shouldn’t have happened. We have changed some laws to diminish that. You know, the number one complaint I used to get from a surface owner was, “I went to town to buy groceries and I came home and there was a well staked out in my pasture, and I had no say in where those stakes went or when they went in, and it’s my property and it’s sacred to me. And how could that happen?”
Well, we changed the law so it can’t happen, and now, before anybody can step on that property – even to start looking at where they might want to put a well – that surface owner has to get seven days’ notice. The owner of that property is given an opportunity to walk the land with the surveyor and talk about the options of moving the well a little here or there or the road a little bit this direction or that direction to minimize the disturbance.
EF: A trucker we met saw another driver dumping toxic waste in a creek. A rancher saw a truck dumping oil drilling waste on a neighbor’s farm. Another interviewee saw a trucker taking water from a rancher’s pond. Even if you add to your staff, how can you stop this sort of thing in such a large area?
Helms: Those are law-breakers. Spills are one thing. We engineer systems to contain the spills and even last year, when we had the high number of spills, 70 percent of them were relatively small and contained to the well site. But there are going to be uncontained spills. Our job is to minimize those. I just met with the attorney general last week about the dumping problem, and one of the things that the deputy sheriffs or the sheriffs’ departments are asking for is help in identifying what was dumped and trying to bring someone to justice for it. I think that’s what you’re going to see going forward, and it will change behavior. I don’t know that it will totally eliminate it, but it will certainly change behavior.
Email update, April 4, 2013:
EF: Why do you oppose current efforts in the legislature to increase the required set-back of oil operations from dwellings to 1,000 feet instead of 500 feet as it is now?
Helms: The NDIC has worked hard to manage and organize the development of the Bakken, most notably, with the establishment of the 15,000 square miles of 1,280 acre spacing units. Should the setback distance change, it would become a whole new ball game as far as management and placement of wells. We would no longer be able to establish east/west corridors, therefore increasing the footprint on the land.
EF: In almost two years of exploring, Terry Evans and I have witnessed spreading discontent among people affected negatively by the oil boom. We have also witnessed or heard about organized opposition to waste dumps in Dodge, White Shield, and the White Earth Valley. Must “collateral damage” to surface-owners and other residents be accepted as the price of drilling oil?
Helms: We recommend you contact the North Dakota Petroleum Council to see the results of their recent survey of ND residents.
EF: At a legislative hearing, a critic – perhaps inadvertently – referred to you as “Mr. Hess.” You worked for what is now called Hess Corporation and Texaco for many years. Do you have a conflict of interest in regulating oil in your state because of that experience?
Helms: Many could argue that my industry experience makes me best suited for this position. I have been on the other side of the table testifying before the commission, so I know the thought process of a witness. This issue was best laid out most recently in a story published in a local paper: Table’s turned: Lynn Helms goes from oil industry to oil regulator.