South Dakota Oil: Untapped Potential - KSFY News - Sioux Falls, SD News, Weather, Sports

South Dakota Oil: Untapped Potential

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 One year ago, we brought you an investigative report about the community of Buffalo, South Dakota.

 The town is sitting on top of what could be a massive oil formation; one that could transform our state's oil production industry from a minor business to a major industry.

 The state of South Dakota believes there is oil there; a lot of it.
 As of a year ago, no oil companies had tried to tap into that massive formation.
 One year later.....the story is the same.

 Harding County, South Dakota is located in the extreme northwest corner of the state, just a stone's throw from North Dakota and Montana. It is home to acres of rolling prairie and stunning vistas and buttes.
 And if you go searching for them, you will also find these; oil derricks....pumping away 24 hours a day, 7 days a week....pulling oil from thousands of feet underground.
 But the oil deposits these derricks are tapped into likely pale in comparison to a suspected oil deposit that..so far...has gone untapped.

 Northwest South Dakota's oil production is pulling oil out of two very well known formations: the Bakken Formation and the Red River Formation. The potential mother lode is in a formation called the Three Forks Sanish and according to the state, not one company has tried to touch it yet.

 And that fact is frustrating to this man, Tim Glines. "Until somebody comes and taps it, its just hard to say what's there." Glines is president of the Buffalo, South Dakota town board.
 He himself works for Continental Oil, one of several companies currently operating in Harding County.
 Buffalo sits roughly in the middle of the Three Forks Sanish deposit....the area South Dakota geologists believe contains oil.
 A year ago, Tim Glines told us he was hopeful an oil company would have come in and starting drilling for it by now.
 But a year later, no three forks drilling has been done. "It's a little frustrating but all we can do is sit back and wait and hopefully it will be our turn someday down the road..."

 To understand why no three forks drilling is being done here boils down to two words: North Dakota.
 While oil in South Dakota is a minor industry....for now..in North Dakota it is big business.
 There is a literal oil boom going on just a few miles north of Buffalo.
 The oil produced from 18 rigs in South Dakota is the same as what one rig in North Dakota can produce.
 And that difference is hard for oil companies to ignore. "I can't see it happening until it slows down up there. And then somebody is going to come down here maybe and take a look."

 But is there a way to get oil companies to take a hard look at South Dakota...sooner rather than later?
 In this science building on the University of South Dakota campus in Vermillion, they're trying to make that happen.

 "Its unreasonable to assume that all the oil and gas resources that we see in North Dakota, Montana and Wyoming stop at the state line." This is South Dakota state geologist Derric Iles and he and his staff has been given a huge task: make South Dakota attractive to big oil companies and get those companies to explore the three forks deposit.
 It is obviously...much easier said than done. "We can't expect industry to just on their own decide 'Well, we should invest in South Dakota' rather than for example North Dakota."

 What iles and his staff are working on is a first of it's kind on-line digital digest: one stop shopping for oil companies.
 The state of South Dakota is putting on line all of it's geological information regarding oil deposits in the state.
 The location of existing well, on line copies of existing oil leases, underground maps showing the approximate location of rock formations...and it's in between rock formations where oil is found.
 But that's the tricky part: while the state can tell oil companies where one rock formation ends and another begins, it can not say for certain that oil is there. "I can't point you to scientific evidence that says 'drill here and you'll find it'...."

 And the reason Iles can't do that is because there is no type of exploration program on the state level: drilling is expensive and the state can't afford it right now.
 Meaning industry will have to spend all the money and absorb all the risk.
 And it's hard to talk risk in South Dakota...when there is a sure thing in North Dakota. "People in south Dakota look across the border to the north and they want a piece of that pie too.."

 Oil is being pulled from the Three Forks formation in North Dakota, which is why Iles believes so strongly that there is a similar abundant oil supply in South Dakota's Three Forks formation.
 But no one will know for sure until someone comes in and drills.
 Back in Buffalo, Tim Glines tells me where he was once optimistic that big oil would come in and drill soon...he now says it is a case of hurry up....and wait....while everyone focuses on North Dakota. "Down here would be totally exploratory, up there they know it's there, they haven't even found the outer boundary of it yet."

 In fact, Tim Glines tells me he will be surprised if any three forks drilling in South Dakota is done within the next five years.
 He says oil companies in North Dakota have yet to find the outer boundary of the oil deposits up there; that means so far, there is no end in sight to the underground oil supply in North Dakota.

2011 KSFY News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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