In an April 2008 study, the U.S. Geological Survey increased its estimates of the size of recoverable oil reserves in the Bakken Formation — an area stretching across Montana and North Dakota — by a factor of 25. The press release for the study said:

North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation. A U.S. Geological Survey assessment, released April 10, shows a 25-fold increase in the amount of oil that can be recovered compared to the agency’s 1995 estimate of 151 million barrels of oil.

The Bakken Formation estimate is larger than all other current USGS oil assessments of the lower 48 states and is the largest “continuous” oil accumulation ever assessed by the USGS. A “continuous” oil accumulation means that the oil resource is dispersed throughout a geologic formation rather than existing as discrete, localized occurrences. The next largest “continuous” oil accumulation in the U.S. is in the Austin Chalk of Texas and Louisiana, with an undiscovered estimate of 1.0 billions of barrels of technically recoverable oil.

This find has given a substantial boost to America’s domestic oil resources and has created a big stream of revenues for oil companies drilling in the two states. It has also created an economic boom for communities near the oil fields. Looking at data from the Bureau of Economic Analysis (chart below), it seems as though oil companies were already ramping up drilling activity ahead of the USGS 2008 study. Oil companies generally don’t wait for governments to do extensive geologic investigation — after all, their business is to find oil.

Oil rig count and revenues are extremely sensitive to the price of oil, and 2008 saw a massive run-up in prices ahead of the financial crisis. After the economy collapsed you can see revenues plunging in 2009. We will see how oil and gas revenues change as more drilling comes online and the economy picks up.