Shale oil, trapped thousands of feet below the North Dakota soil, is under extreme pressure. And in a way, the same is true of Continental Resources Inc.
The Bakken-focused firm turned in 39 percent production growth last year and reaffirmed its goal of tripling production by 2017. But to get there -- and to do its part for the U.S. energy boom -- it will have to keep wringing oil out of increasingly stubborn rocks.
Last year, the Bakken began to show signs that it's not going to surrender oil as easily as it once did. And that's motivated top drillers, including Continental, to cook up new ways of keeping the crude flowing.
One key technique: downspacing. This year, Continental will drill in tighter parallels -- like sticking more straws into the same horizontal milkshake -- to get more of the oil it knows is there.
"If successful, we think other operators in the region could follow suit which could spur an additional acceleration of well counts in the region," a team of Barclays Capital analysts led by James West wrote last month.
It's not that anyone believed the Bakken's meteoric growth -- now topping a million barrels of oil per day, from less than 200,000 a day in 2007 -- would last forever. But last year, more observers began to ask whether current technology's limit is coming into view.
"Rate of growth slowing," EOG Resources Inc. summarily said of the Bakken in a February investor presentation.
It said the Bakken has transformed from a "steady growth" play to one where return on investment -- and high-efficiency drilling -- are king. While EOG will spend more in the Bakken this year, it will focus on harvesting its core locations, not hunting for new ones.
"We are seeing the impact of decline rates and a slowing rate of change in the Bakken," analysts with Credit Suisse wrote last month.
Their report compared the first 10 months of 2012 to the first 10 months of 2013. Production grew in both periods, but the 2013 gain was 38 percent smaller.
"The magnitude of the deceleration in growth was a bit of a surprise in light of improved completion techniques used throughout the basin," said the team led by Edward Westlake.
Keeping up with the curve
Less than a decade into the domestic oil and gas boom, shale plays have begun to show similar tendencies. After companies scramble into a promising new play, a tug-of-war between technology and geology takes over.
Shale's very nature, unlike that of conventional drilling, is to burst with oil or gas in the first year, then peter out rapidly. It results in current recovery rates that may seem modest to the casual observer: in the Bakken, usually between 2 and 10 percent of the resource in place.
Getting more oil takes innovation -- in both technology and technique. Then, to reach "manufacturing" scale, these tricks have to be applied across a play.
"The rock will always win," said Joseph Stanislaw, independent senior adviser for energy and sustainability at Deloitte. "The whole game is to keep the decline curve from happening. It's always going to happen, but slowing it down."
As the Bakken's largest acreage holder, Continental holds an unusual vantage point. Not only does it see many parts of the play, facing diverse rocks, it also counts on the Bakken for most of its production.
This year, the company hopes to wrap up seven downspacing pilot projects. The goal is a mass-production formula: a way to produce oil at the scale of a factory belting out cars or sweatshirts.
What would that look like? Warren Henry, the company's vice president for research and policy, says to imagine putting wine bottles in the refrigerator.
The fridge has shelves, like the Williston Basin. It has three shelves for the Bakken -- its upper, middle and lower tiers. Beneath that, there are four more shelves for the promising Three Forks formation.
The wine bottles slide in sideways -- like the "laterals" that bite into each level of the shale.
But unlike for chardonnay, placement is paramount. If each fridge is a 1,280-acre space, Continental wants to optimize how many bottles to use and where.
"How many wells do I need to efficiently harvest this 1,280-acre space?" Henry said. "Obviously, when wells cost $7.5 million to $8 million apiece, you don't want to drill 20 if you could only drill 16 for the same output. Or 16 when you could do 12."
Results are highly preliminary, Henry cautioned. But in one pilot project, wells are on track to be 50 percent more productive over their lifetimes than Continental's benchmark Bakken well.
"Ask me again in a year," he said.
Best or worst of times in the Bakken?
Whatever works, the neighbors are sure to find out. Whiting Petroleum Corp., Oasis Petroleum Inc. and Kodiak Oil & Gas Corp. are among those also experimenting with spacing. Sometimes, they're even cooperating on the same wells.
Henry said he expects the industry to eventually suss out six to eight "recipes" for harvesting the play.
"Is the play eventually going to decline? Sure it is," he said. "But not in the next 10 to 15 years."
The new techniques have Bakken boosters believing the play has many years left, even with current technology. EOG has said it has eight years of drilling inventory left in the Bakken, even without advances in technology or spacing.
Drillinginfo, an industry data merchant, estimates that overall production can grow for another decade or two -- even assuming that production stays within a few counties and technology makes no leaps.
"But what you're likely to see is that as production continues to grow up, the explosiveness of the growth is going to decrease," said Kevin Thuot, an engineering research analyst.
"We don't really know whether we're in the best of the Bakken or in the worst of the Bakken. And you sort of won't know that until you drill it," said John Fierstien, vice president of product management.
More shifts ahead
Technology optimists say that even if the rock always wins, the oil industry has a habit of discovering a new trick sooner or later.
When it does, that can radically shift how much oil the country thinks it has.
Last April, the U.S. Geological Survey estimated the Bakken and Three Forks to hold 4.4 billion to 11.4 billion barrels of technically recoverable oil.
In 2008, USGS had estimated 3 billion to 4.3 billion for the Bakken -- a figure that was itself a 25-fold increase on its 1995 estimate.
Pete Stark, senior director and advisor for upstream research at IHS, believes industry can keep raising the number.
"Currently the industry may recover only 4 to 8 percent of the oil in place," he said by email. "Ten years from now we will recover 12 to 16 percent of the oil in place."
New techniques mean a "sweet spot" lasts much longer than it used to, he said. And down the road, drillers can apply horizontal drilling to "ratty" reservoirs that were abandoned decades ago.
"Many moving parts in this and we are only in the first inning of a nine-inning game," he said.