Oil-Drilling Boom Underway
Source: The Wall Street Journal, Ryan Dezember and Matt Day (2/10/11)
"Drilling activity at an unprecedented pace in Eagle Ford, Bakken and Montney shale formations."
Oil-drilling activity in the U.S. has accelerated to a pace not seen in a generation as energy companies, oilfield contractors and landowners rush to exploit newly profitable sources of crude.
The number of rigs aiming for oil in the U.S. is the highest since at least 1987, according to Baker Hughes Inc., nearly double last year's count and about 10 times the number that were drilling for oil in the late 1990s.
While the drilling surge is unlikely to alter the global oil-supply picture, analysts say the activity could greatly boost domestic production and help offset declining output in Alaska and the Gulf of Mexico.
These reservoirs, trapped in tight shale-rock formations, were deemed too hard to crack a decade ago. But in the past two years, breakthroughs in drilling technology and high oil prices have led companies to switch rigs formerly devoted to drilling for natural gas to emerging oilfields like the Eagle Ford shale formation.
In this sun-scorched cattle country, prolonged drought and financial strain gave way to prosperity when the oil-patch leasing agents began pouring into town three years ago. For struggling ranchers the proceeds from land deals and royalties are "pennies from heaven," says real-estate broker and oil-and-gas producer David Phillip. "All these new trucks you see ranchers driving," he says, "it wasn't from cattle."
The Eagle Ford experienced a more-than-tenfold increase in the number of wells drilled last year. The trend is playing out nationally, in formations such as the Bakken Shale in North Dakota and the Montney Shale in California.
Oil production from these sources is expected to reach 1.5 million barrels a day by 2015 from fewer than 500,000 barrels a day now, similar to the amount produced in the Gulf of Mexico, and the equivalent of nearly 30% of current U.S. production.