BOOM! It’s Here! (Oil Boom, That Is!)

Landowners get down to business with a representative of Lonesome Dove Resources after Monday night’s presentation. Sun Times photo by Darryl L. Flowers
By Darryl L. Flowers
Published: Sunday, February 5, 2012 6:31 PM CST
If there is anyone in this part of Montana that still questions whether or not there is commercially recoverable oil under our feet, they should spend a couple of hours listening to the folks with Lonesome Dove Resources discuss their plans for the area.

Monday night a crowd of almost 50 people, mostly invited landowners and leaseholders, filled one of the meeting rooms at the Stage Stop Inn in Choteau.

Jim Bass, Consulting Geologist for Lonesome Dove, gave an easy to understand presentation with slides, videos and a good dose of Texas humor.

Bass described Lonesome Dove as a group of “four or five Texas companies, each with a different expertise in the oil industry.” He explained that Lonesome Dove, or its affiliated companies, are currently active in many of the nation’s oil plays, including the “Fayetteville” play in Arkansas and the “Marcellus” play in Virginia and West Virginia.

According to Bass, Lonesome Dove is a private company, and as such does not need to grab big lease acreages and then head to Wall Street to raise capital for operations. “We’re a company that’s going after oil,” Bass told the crowd.

Bass, who comes from a family involved in the oil business, touched on that family history as he explained that his father was VP of Exploration with Texaco, saying, “He drilled wells in Montana.”

Bass used slides to explain the geology peculiar to the region that has resulted in massive oil deposits. According to Bass, the events that produced and trapped the oil here are identical to those that occurred in the Williston Basin in North Dakota.  The Sun Times, in research done recently for an upcoming story, has confirmed that, chemically, the oil here is identical to that in Williston Basin.

The area of particular interest to Lonesome Dove at this time is an area that covers the majority of Teton County, which lies just to the west of a geologic formation referred to as the “Sweetgrass Arch.”

The Texas Oilman described the “targets” the company is aiming for, in particular the Exhaw Shale, also known as the Alberta Bakken. Bass claims that the shale in this area is 100 feet thick, explaining that this is the most productive area underground in this area.  But, according to Bass, who was drilling wells in North Dakota in the 70s, there are two other oil bearing rock formations below Teton County: the Rierdon and the Souris River layers.  Bass used two words to describe the Reardon Formation: “oil soaked.”

Someone in the crowd asked how far to the west they planned to search for oil.  Bass replied that, along the front, near the mountains, the hyrdocarbons buried underground were exposed to too much heat and “burned.”  “All you’ll find next to the front is gas.”  He added that with the low price of natural gas, and the problems with transporting it to market, it made no sense to pursue that fuel at this time.

The transportation of the oil to refineries was the next topic, with Bass explaining that with the wells already in development in Glacier County, pipeline capacity will fill up rapidly.  As wells in Teton County begin to produce, rail and truck will be used to carry some of the product to refineries in Great Falls and Billings.  “We have already been in touch with the refinery in Great Falls,” said Bass. “They are in the process of expanding their capacity.”

According to Bass, the logical, long term solution is pipeline transport of the oil to the refinery. “As we progress, we will bring in the companies that we have worked with in the past to put in new pipeline capacity.”  On a map, Bass showed the location of several pipelines that cross the eastern edge of Teton County in a North-South route. There is also a pipeline running just to the south of Fairfield that might be available.  Someone mentioned a line carrying gas to the south of Choteau. Bass explained that the owner of that line might want to switch to oil.

A representative of CHS in attendance briefly described their system of transport to the CHS refinery in Laurel, Montana and asked if Lonesome Dove might have an interest in utilizing that refinery.

A video was played that gave a quick explanation of the drilling process, the horizontal drilling process, and the hydraulic fracturing process.

Included in the video were photos of drilling rigs operated by the company, showing the systems they use to reclaim the water and chemicals used in the hydraulic fracturing process. Bass told the crowd that water from the lakes and streams was not clean enough to be used in the wells.  “The bacteria in surface water will react with the hydrocarbons underground, creating Hydrogen Sulfide,” a deadly gas.

“When we need water, we will contract with a water producer, such as a town.” said Bass. “We may work with the landowner to drill a water well on their property.  We’ll drill the well and set it up to supply the water we need. After we leave, the well is yours to use.” That brought a positive response from several ranchers in the crowd.

When describing how Lonesome Dove drills multiple horizontal “legs” Bass described the pattern as “intersecting pitchforks.” “We try to drain every drop of oil,” he added.

Someone asked what kind of production the company looks for in a well. Bass described how oil men had to use caution as they took oil out of the ground, being careful to use the natural pressure within the oil-bearing rock formations to move the oil to the borehole in a controlled manner. When questioned further, Bass told the crowd that they look for the payout on a well to occur in “about 18 months.”  “At $100 a barrel, a well producing 100-150 barrels a day can do that.”

During his presentation, Bass revealed a bit of industry “scuttlebutt,” as he gave credit to Primary Petroleum, the oil and gas exploration company that has been on the ground in the area for some time: “Primary was here first, and we’re searching for spots behind them.” Bass continued, “There are a lot of rumors out there, and what we are hearing is that Primary is seeing some good results.”

Bass next added that there were some fascinating well logs from Cascade County. “It looks really good.” After the meeting Bass commented to the Sun Times that more research needs to be done in Cascade County.

According to Bass, Lonesome Dove has reached about 50% of their goal when it comes to acquiring leases in the area.  Among those in Teton County that have signed on with Lonesome Dove are Jim Salmond and AMS Ranch.

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Author: montanaoilreport

After my first job at a newspaper -- delivering papers for the Jackson (TN) Sun, ink was in my veins. Since the 1970's I've worked in every area of the Printing and Publishing industry, with most of that time spent in the pressroom. In 2008 I moved to Montana and purchased the Sun Times of Fairfield (fairfieldsuntimes.com). In 2011 I realized that most media outlets were either ignoring, or attacking, the growing oil and gas industry in Montana, so I started the Montana Oil Report as the source of information on this important industry.

4 thoughts on “BOOM! It’s Here! (Oil Boom, That Is!)”

  1. Great post Darryl! I’ve heard a rumor from the Thursday meeting Jim Bass hosted and I was hoping you could clear it up for me. A guy I know who was at the meeting said he heard that an oil company could legally park a rig 600 feet off of your mineral rights, drill down, and horizontally drill onto your property for 6800 feet. My friend came away from the meeting with a simple message. It doesn’t pay to wait around and not lease out your mineral rights because oil companies can legally drill down and take resources from your mineral rights area. Is this true? It seems like stealing.

    1. I was at the meeting on Thursday night as well as the Monday night meeting. Your friend, it seems, heard it wrong. Some of what he says flys in the face of logic, and the law. If what your friend has told you was true, oil companies would not need to lease mineral rights when they could just put up a rig and start sucking the oil out.

  2. I inherited mineral rights on a wheat ranch in Choteau many years ago. I live in Illinois, north of Chicago (Woodstock). I wonder if we should make a trip west to the town and see for ourselves if there are active private oil wells in the viscinity of the property. I am reading about town meetings, pros and cons of leasing, etc.in your paper. Please reply with any suggestions.. Sincerely, Judy Low

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