Monday, October 04, 2010
Horizontal drilling technology and hydraulic fracturing methods employed by the natural gas industry now offer tremendous promise of growth to domestic crude oil production
According to a new market analysis just released from BENTEK Energy, LLC, the horizontal drilling and hydraulic fracturing technology that has revolutionized natural gas production from shale’s and other unconventional plays is beginning to transform the domestic crude oil industry. The new report, titled The Rush to Unconventional Oil, details how these technologies are being used to unlock oil from shale’s in a number of plays such as the Backend and Niobrara shale’s in the Rockies region, the Bone Springs/Wolfberry, Granite Wash and Eagle Ford plays in and around Texas and the liquids-rich shale’s in the Southwestern Marcellus.
According to BENTEK, the most explosive growth is coming from unconventional oil shale plays such as the Backend Shale in North Dakota. In the past year alone, the Backend oil production has rocketed up 79%, moving North Dakota into position as the nation’s fourth largest oil producing state. Rocky Mountain oil production is expected to double in the next ten years.
“These are extremely important developments for U.S. crude oil production,” noted E. Russell (Rusty) Braziel, BENTEK Energy Managing Director. “The growth trend in unconventional oil looks strikingly similar to what we saw in the early stages of natural gas shale production. And the development is being driven by attractive oil prices, which remain high relative to natural gas. This has provided the economic incentive for many players in the upstream industry to turn to more oil-dominated exploration opportunities to realize higher returns for their drilling investment dollars.”
The report assesses the recent growth trend in U.S. oil production, which is up almost 10% over the past two years. Much of this growth has been in the deep waters of the Gulf of Mexico, which is now under a cloud due to the current moratorium and potential long-term regulatory changes expected as a result of the political fallout from the recent BP oil spill. However, the study indicates that growth in onshore unconventional crude oil production can be expected to offset deepwater declines over the next few years.
“The transfer of unconventional drilling technology from natural gas to oil drilling has shown great promise thus far,” Braziel noted. “Producers seem to be achieving similar drilling efficiencies, resulting in lower costs and higher production yields.”
BENTEK’s report warns that despite tremendous early success in a variety of unconventional oil plays, several of these new liquids-rich regions lack adequate gathering, processing and transportation infrastructure to move growing amounts of production to market. “Significant new investment will be required,” Braziel said. “Which projects end up ultimately being built to serve these growing new onshore oil producing regions could dramatically change the U.S. energy landscape.”
In conjunction with the release of The Rush to Unconventional Oil, BENTEK has also initiated the publication of a new series of monthly reports called the Oil Production Monitor series, which tracks regional crude oil drilling activities, permitting, well results, pipeline infrastructure developments, crude prices and forecasts of crude oil production. The Rockies Oil Production Monitor is available today, and includes The Rush to Unconventional Oil in an introductory subscription package.
For more information about BENTEK’s analysis of crude oil production, visit http://www.bentekenergy.com/ or call BENTEK at 888-251-1264.