As many energy investors know, North Dakota's oil production recently surpassed 1 million barrels a day. Does this mean that the growth story is now over and all the best locations have been drilled, or, as downspacing allows oil and gas companies to target the Three-Forks benches just below the Middle Bakken interval, is the growth story still underway? Only time will tell, but Oasis Petroleum (NYSE:OAS) is one E&P player trying to shake things up by targeting the deeper Three-Forks formation, and its results look promising. 

More than just the Middle Bakken
During the early years of the shale revolution, oil and gas companies were only tapping into the Middle Bakken bench as it was the most economical. But this wasn't properly utilizing the true potential of the Bakken/Three-Forks play, as the Three-Forks was left just sitting there and not producing. Oasis Petroleum saw the possibilities laying deeper down in North Dakota, so it decided to test out downspacing to see if it could drill into both the Middle Bakken and the Three-Forks benches. 

Downspacing is where oil and gas players reduce the distance between each well so they can bring more wells online in the same amount of space. Oasis Petroleum was successful in its endeavors, as were many other companies, which is why it's planning on completing 30 wells this year targeting the second and third benches of the Three-Forks while also tapping into the Middle Bakken and the first bench of the Three-Forks. 

Production data from current wells targeting the lower Three-Forks intervals look promising, but could be improved. On average these wells have production curves indicative of an EUR (estimated ultimate recovery) between 400,000 BOE (barrels of oil equivalent) and 600,000 BOE. Some wells are outperforming the curve, but there are some wells, like the Bonita, that are producing substantially below the curve. As more wells are brought online that target the lower Three-Forks benches, Oasis Petroleum will be able to leverage its existing knowledge and use better drilling techniques to boost the EUR rates and not produce duds like the Bonita.

Also, if the EUR spread could be improved to 500,000 BOE-600,000 BOE (for example), Oasis Petroleum would be consistently producing a lot more oil per well. Beyond boosting EUR rates, Oasis Petroleum is opening up more drilling locations through downspacing by targeting the lower Three-Forks benches, which increases its recoverable reserves. To take a look at what a bit of expertise can do to well production, look no further than "King Bakken" itself.

The king of downspacing
As the biggest player in the Bakken/Three-Forks play, Continental Resources (NYSE:CLR) has been the trend setter for downspacing projects. One example of its expertise being effectively put to work can be found at its Hawkinson project, which had 14 wells tap into four oil producing intervals, ranging from the Middle Bakken down to the Three-Forks. The Three-Forks shale has four benches, three of which were tapped into via the Hawkinson. 

Out of the 14 wells, 13 had production curves that were on average trending 50% above a 603,000 BOE EUR, which means that this method of downspacing couldn't possibly be interfering with production at nearby wells (the biggest concern with downspacing). Continental Resources was also able to show off its ability to utilize better drilling practices to bring more productive wells online in the future. After the Hawkinson produced such amazing results, Continental Resources decided to take it one step further with the Rollefstad project.

The Rollefstad is very similar to the Hawkinson, and the results were just as encouraging. On average, Rollefstad wells tapping into the Middle Bakken and first bench of the Three-Forks (TF1) had IP (initial production) rates of 2,960 BOE/d, versus 1,330 BOE/d for existing Middle Bakken and TF1 wells. For wells targeting the second and third benches of the Three-Forks shale, they had IP rates averaging 2,650 BOE/d.

This is quite amazing and proves that the Bakken/Three-Forks play still has plenty to give operators like Oasis Petroleum and Continental Resources. Some analysts see the growth story slowing down, but with results like these it's hard to see North Dakota giving up without a fight. Continental Resources, due to its size and recent string of successes, will probably keep leading the charge deeper into the Bakken/Three-Forks, with Oasis Petroleum not far behind. 

Foolish conclusion
By perpetually pushing the limits of downspacing, Oasis Petroleum and Continental Resources have been able to prove that the Three-Forks is a very economical play to tap into. As more E&P players tap in the second and third benches of the Three-Forks, those benches will become just as "conventional" as the Middle Bakken itself. One bench is still being left out, and when Continental Resources decides on what kind of pilot projects it wants to embark on next I would hope it attempts to target the fourth Three-Forks interval. 

Naysayers see North Dakota's hydrocarbon driven growth story petering off in a few years time, but as history has proven before, Peak Oil is still a long ways away.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.