Soaring oil prices worldwide and improved recovery techniques pushed South Dakota's limited oil industry to its best production in two decades in 2007, and the mini-boom is continuing this year.

Oil exploration and production is spreading out beyond the traditional oil fields in the northwest part of Harding County, as established companies expand and newer producers take a chance on smaller operations. That sustains a jobs market already boosted by energy production and promises more to come, Harding County Auditor Kathy Glines of Buffalo said.

"We've got a lot of things going on," she said. "I think we're going to see a tremendous amount of labor force show up in the next few years, just to complete all these projects that are anticipated."

Glines knows more about the oil and natural gas business than her auditor's position requires. She's also the county's planning and zoning coordinator, which means she keeps track of permits required to dig new wells or alter existing ones to accommodate new technology.

In 2007, Glines issued 34 well permits, mostly for retrofitting existing wells. Already this year she has issued 32 permits, mostly for new wells.

"Here it is the first of April, and I think this is only the tip of the iceberg," Glines said. "I anticipate quite a bit more to come. The oil work is spreading more to the east. It's staying on the northern end of the county right now. But as the fields progress, I'm going to see them a little more south than what we typically see."

Already, natural gas fields are being developed south of Buffalo. They'll add to established production from fields in the Camp Crook area in the western part of the county.

"We're just seeing a lot of activity out there," Glines said. "And as a rural community, we really see the benefits of it."

As good as that news is, Glines and others who understand the value of energy development to Harding County wonder if a much bigger boom is coming. The vast, largely untapped energy potential in the Bakken Oil Formation has attracted national attention. It is considered by some to be a potential solution to national energy problems.

The Bakken is a geologic formation within the Williston Basin, which covers much of North Dakota, southeast Montana, parts of Saskatchewan and Manitoba and a chunk of northwest South Dakota. The Bakken Oil Formation is believed to have monstrous-but-undefined oil reserves, possibly even larger than those in the Middle East nations. That talk is exciting to Harding County residents, Glines said.

Fred Steece, oil and gas supervisor for the state Department of Environment and Natural Resources, said he understands the excitement. Since the Williston Basin and its many oil-laden formations - which lie at different depths and varying thicknesses - include a chunk of South Dakota's northwest quarter, the potential for oil reserves exists in many areas, Steece said.

But Steece said it's unclear how much of the Bakken Formation reaches South Dakota and whether the parts that do contain recoverable oil reserves are similar to those already identified in Montana and North Dakota.

"Geologically, we're not fully convinced that the productive zone of the Bakken extends into South Dakota," Steece said. "Otherwise, I'm sure there would be people in here. There would be leasing and test drilling."

There isn't - at least, not yet. Steece said it's possible that such a boom could come to the Bakken and that South Dakota could benefit. But he also said it would be unwise to start planning on bountiful production estimates based on expansive reserves that could be difficult to extract. That's true throughout the Williston Basin and the shale-based geologic formations, he said.

"They're talking about resources, reserves, original oil in place," Steece said. "Sure, there's a huge resource up there, but how do you get at it? Sure, you can say there's more oil up there than in the Middle East, but can you get it out of there? It's real tight shale, compared to sand in the Middle East."

Steece is optimistic, however, about the potential for more oil discovery and recovery from other formations in South Dakota's portion of the Williston, and from areas outside of the basin as well. Almost all operating wells are in Harding County. But there are about a dozen operating wells in Fall River County and four in Custer County.

There's also a known oil field in Dewey County near Lantry, which is on the southeast side of the Williston Basin and far outside of what is often considered the state's oil country.

"It's intriguing. There is some oil over there by Lantry," Steece said. "They produced about 100,000 barrels there over 20 years or so. Then it wasn't economic, so they plugged the wells. I think there might be some potential for somebody to go take another look at it. I've had guys inquire almost monthly, particularly since the price of oil went up."

New technology and higher oil prices could mean more exploration and development inside and beyond the traditional fields, Steece said.

New techniques, equipment and computerized guidance systems allow crews to go down vertically thousands of feet into existing wells, break out laterally and exploit more of the geologic formation which holds the oil.

"The technology has improved to the point where we can re-enter some of those old, depleting oil wells and drill horizontal laterals," Steece said. "It's proven to be a very successful technique to drill those horizontals. It has given new life to that Buffalo area."

The heart of oil exploration and recovery in South Dakota continues to be isolated in Harding County, where Buffalo is the county seat. And most of the oil so far has come from familiar, heavily explored fields north and west of Buffalo.

There are currently about 15 operators in oil exploration and production in the state.

Continental Resources and Luff Exploration, the two big production companies operating in Harding County, are working the old fields with new technology. They also are exploring previously untapped fields farther to the east, along Highway 85 in the Ludlow area. And new exploration and recovery technology make these fields more promising then ever before.

"We have a drilling rig active up there right now. It's the first hole since the first of the year. It's a wildcat area," Continental Resources field manager Gordy Carlson said. "We've never been in there. It's very exciting."

It could prove productive, too, and help drive the state's small, geographically isolated oil industry to record production in the coming years. Last year was impressive enough.

The 153 wells operating in the state produced 1,664,889 barrels of oil in 2007. That's the most since the state's production record was set in 1988.

Steece said price, technology and incentives were the three main factors in the near-record production. The lateral drilling technology continues to mean a great deal to expanded production in the Harding County fields, he said. And state incentives offering a break on royalty fees paid by private companies for new production on certain state lands also helps, he said.

And there's nothing like a good market to inspire private enterprise to produce more of a product, Steece said.

"The price of oil certainly stimulates oil and gas activity," he said.

Contact Kevin Woster at 394-8413 or kevin.woster@rapidcityjournal.com.