Bakken shale producers have spent the past few years investing billions of dollars to push North Dakota to new oil production records. That is likely to change in 2015 as plunging oil prices should cause producers to cut back on investing in exploration for new sources of oil. In fact, according to a recent Bloomberg report, producers already expect capital spending to be flat in 2015 rather than the previously anticipated 5%-10% growth. And if oil prices continue to fall so will capital spending.

Bakken exploration drilling could be cut
Drillers have spent a lot of money in recent years exploring shale plays below the middle Bakken, where the bulk of the play's oil production is coming from. Specific areas of interest are the lower Bakken and the Three Forks formation, as shown in the following slide from a recent Whiting Petroleum (NYSE:WLL) investor presentation.

Source: Whiting Petroleum Investor Presentation. 

Some of this spending to test new portions of the play will likely be cut because it constitutes riskier spending. This is particularly true with the Three Forks formation, where Whiting is exploring. The following slide highlights several new objectives that are part of Whiting's prospective drilling locations.

Source: Whiting Petroleum Investor Presentation.

These are the types of locations that Whiting Petroleum and its Bakken peers might not test next year if oil prices continue to drop.

Bakken optimization spending could dry up
With 2015 fast approaching, many Bakken producers are preparing their capital expenditure plans for the year. Continental Resources (NYSE:CLR), for example, plans to grow its Bakken drilling budget from $2.85 billion this year to $3.03 billion in 2015, while its overall capex budget will grow from $4.55 billion to $5.2 billion. However, the rapid deterioration in oil prices might force Continental Resources and other producers to rethink plans to to increase 2015 capex budgets.

One area for potential spending reductions is testing new technologies and well designs. Continental Resources has been a leader in testing enhanced completions, well density tests, and 3D seismic imaging, all in an effort to get more oil from each section. This is actually adding to Continental Resources' well costs, which went from $7.8 million to start this year to $10 million per well, as it has reinvested savings gained from operational efficiency into optimizing each well. It's quite possible that some of these investments won't be made in 2015 as the overall rate of return per well is falling along with oil prices.

Whiting Petroleum has also invested to improve its completion design. As the following slide illustrates, the company's completion design in the Bakken has rapidly evolved over the past year.

Source: Whiting Petroleum Investor Presentation.

Any drastic cuts in 2015 capital spending by Whiting Petroleum and other producers will significantly slow the evolution of new technologies. These new technologies and designs are having a real impact on producers' ability to extract more oil from the Bakken, but the cost might outweigh those benefits if oil prices fall too low. 

Investor takeaway
For the past few years we've seen Bakken drillers increase their capital spending in the play. Analysts see flat spending next year. However, if oil prices keep falling, producers might have no choice but to cut spending in 2015, which will have a big impact on growth.