South Dakota’s crude oil production is far less than 1% of the nation’s total, and the state has no oil refineries. Production is concentrated in the western corner of the state, where Harding County produces the bulk of the state’s crude oil and natural gas, mostly from traditional vertical wells. Although the Williston Basin extends into South Dakota from the north, the productive Bakken Shale does not. Oil production in South Dakota has been fairly steady for decades.
Although South Dakota has no major crude oil pipelines, several petroleum product and liquefied petroleum gas (LPG) pipelines supply these products from neighboring states. More than one-sixth of South Dakota households use LPG as their primary fuel for home heating. LPG, fuel oil, and kerosene are used to heat over one-fifth of the state’s homes.
Almost one-half of the petroleum consumed in the state is in the form of motor gasoline. Because it has no U. S. Environmental Protection Agency air quality non-attainment areas, South Dakota allows the statewide use of conventional gasoline. As a result, only a tiny fraction of the ethanol produced at the state’s ethanol production facilities is used in South Dakota. The overall capacity of those plants is slightly more than 1 billion gallons per year, but only 41 million gallons are consumed within the state.
Harding County produces the bulk of the state’s crude oil and natural gas, mostly from traditional vertical wells.
Like crude oil, natural gas production is modest, and almost all of it is produced in association with crude oil. South Dakota, with its small population, uses relatively little natural gas. Industry, including agriculture, is the largest natural gas consuming sector in the state. Nearly one-half of South Dakota households use natural gas as their primary fuel for home heating.
Natural gas enters the state by pipelines, primarily from North Dakota. Over nine-tenths of the natural gas received in South Dakota is shipped on to Minnesota. The state has no underground natural gas storage.
Nearly one-half of South Dakota households use natural gas as their primary fuel for home heating.
South Dakota oil development facts:
- Rig Count
South Dakota typically has one rig drilling (about one new well per month).
- New Oil Wells
About 12 new wells per year are drilled in South Dakota: new wells offset declining production from older wells.
- Oil Production
South Dakota produces about 1.6 million barrels from 150 wells.
- Known Oil Reserves in South Dakota
About 98% of South Dakota’s oil is produced from the Red River Formation underlying a 400-square mile area in north central Harding County. The remainder comes from a few Minnelusa wells in Custer and Fall River County. South Dakota continues to remain largely under-explored when it comes to oil and natural gas exploration.
South Dakota Fracking
Wells in the Red River Formation do not require fracking because it is more permeable than unconventional oil plays like the Bakken Shale. Small-scale fracking has been used in gas wells and water wells for decades in South Dakota. Fracking a gas well or water well in South Dakota involves bringing in about 2 truckloads of water to inject 15,000 gallons – equivalent to the amount of water in a 3-foot deep 30-foot diameter above-ground pool.
Horizontal Red River wells in South Dakota are about 8,500 feet deep and cost about $2.5 million to drill.
Horizontal Bakken wells in North Dakota are 10,000-feet deep and cost about $7.9 million to drill. The additional cost is due mostly to high-pressure, multi-stage fracking.
Potential for future development in South Dakota
The Bakken Formation occurs in North Dakota, Montana, and Saskatchewan, but does not extend into South Dakota. However, a number of formations that produce oil in North Dakota, such as the Tyler and Three Forks do extend into South Dakota. Only additional exploration will tell if any of these formations will produce oil in South Dakota.