Armstrong Operating Inc. application to drill new oil well near Dickinson, ND, approved

A seasoned Dickinson oil company has received approval to attempt another drill for black gold just outside city limits and hopes to start before Christmas.

City commissioners unanimously approved an oil well drilling application submitted by Armstrong Operating Inc. to drill a well south of Dickinson’s Heart River Golf Course.

Armstrong Operating is not new to the oil-drilling realm.

In September, the company drilled a highly productive well in the Lodgepole Formation, the Laurine Engel No. 1, just south of Dickinson’s Heart River Golf Course.

“Ironically, it’s the most significant discovery in my 35 years in the oil and gas business, and I can see it from my house,” said Mike Armstrong, chairman and CEO, in a September press release.

The surface location of the new well, dubbed the Gruman 18-3, is close to Laurine Engel No. 1, sharing the same half-section, with each section equaling one mile.

“It’s not horizontal, but it’s not completely vertical,” Armstrong said. “It’s a deviated hole, just like the first one was.”

Armstrong said the new well is going through the existing location, however due west then angling northwest, and is also part of the Lodgepole Formation.

Armstrong said the well will drive right through the existing well’s location and pad.

“I diagonal northwest toward all the houses out there and my bottom hole location … is actually going to be under the lake,” Armstrong said.

The Lodgepole Formation is home to 62 producing oil wells to date, said Lynn Helms, director of the North Dakota Department of Mineral Resources, in a Wednesday e-mail.

The Gruman 18-3 well will not require any hydraulic fracturing, a high pressured injection of water and chemicals used to break up rock containing oil, as many oil wells in the Bakken Formation require.

One of Armstrong’s partners, Harold Hamm, chairman and chief executive officer of Oklahoma-based Continental Resources Inc., said the Laurine Engel No. 1 well was the “first significant Lodgepole discovery in the Dickinson area since the late 1990s,” according to a September press release.

The fiery flair being produced by the Laurine Engel No. 1 may not last long as Armstrong is in the process of having a pipeline installed to capture gases instead of having to burn them off.

In August, 1,001 wells each flared gas at an average daily rate of 64.5 per thousand cubic feet. Since the gas is unprocessed, it has an average value at the well of $2.61 per thousand cubic feet, Helms said in an e-mail.

“That means the average well that flares in North Dakota is flaring gas with a value of $168 each day,” he said. “The value of the oil associated with that gas would be approximately $4,100 per day at today’s posted price for North Dakota Sweet crude.”

The flare is burning more than just excess gas.

“I’m waiting for the pipeline to get hooked up … I’m burning up all my money,” Armstrong said.

Armstrong said he anticipates equipment to be at the well site by the end of the week to build the location.

Once the oil rig is contracted, Armstrong hopes to begin drilling before Christmas, adding it can take anywhere from 22 to 30 days before he will know if the well is a producer.

“I’m very enthusiastic about exploring for oil and gas,” Armstrong said. “We are the largest and the deepest basin (Williston Basin) in North America.”

To date, North Dakota has 68 active drilling rigs, according to the North Dakota Oil and Gas Web site.

On Oct. 13, North Dakota had 54 active drilling rigs, as previously reported in a Press article.

After an application to drill was approved at a Dickinson City Commission meeting Monday evening, Armstrong’s new well could add to North Dakota’s increase in oil activity.

Helms said state oil officials recently met with the area’s 12 most active drilling companies to discuss 2010 projections, and based on those discussions, Helms estimates about a 60 percent increase in the coming year, as previously reported.

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