Posted on 02/17/2011 9:35:21 AM PST by ckilmer
A new drilling technique is opening up vast fields of previously out-of-reach oil in the western United States, helping reverse a two-decade decline in domestic production of crude.
(Excerpt) Read more at foxnews.com ...
This new drilling is expected to raise U.S. production by at least 20 percent over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers.
"That's a significant contribution to energy security," says Ed Morse, head of commodities research at Credit Suisse.
Oil engineers are applying what critics say is an environmentally questionable method developed in recent years to tap natural gas trapped in underground shale. They drill down and horizontally into the rock, then pump water, sand and chemicals into the hole to crack the shale and allow gas to flow up.
Because oil molecules are sticky and larger than gas molecules, engineers thought the process wouldn't work to squeeze oil out fast enough to make it economical. But drillers learned how to increase the number of cracks in the rock and use different chemicals to free up oil at low cost. "We've completely transformed the natural gas industry, and I wouldn't be surprised if we transform the oil business in the next few years too," says Aubrey McClendon, chief executive of Chesapeake Energy, which is using the technique.
Petroleum engineers first used the method in 2007 to unlock oil from a 25,000-square-mile formation under North Dakota and Montana known as the Bakken. Production there rose 50 percent in just the past year, to 458,000 barrels a day, according to Bentek Energy, an energy analysis firm.
It was first thought that the Bakken was unique. Then drillers tapped oil in a shale formation under South Texas called the Eagle Ford. Drilling permits in the region grew 11-fold last year.
Now newer fields are showing promise, including the Niobrara, which stretches under Wyoming, Colorado, Nebraska and Kansas; the Leonard, in New Mexico and Texas; and the Monterey, in California.
"It's only been fleshed out over the last 12 months just how consequential this can be," says Mark Papa, chief executive of EOG Resources, the company that first used horizontal drilling to tap shale oil. "And there will be several additional plays that will come about in the next 12 to 18 months. We're not done yet."
Environmentalists fear that fluids or wastewater from the process, called hydraulic fracturing, could pollute drinking water supplies. The Environmental Protection Agency is now studying its safety in shale drilling. The agency studied use of the process in shallower drilling operations in 2004 and found that it was safe.
In the Bakken formation, production is rising so fast there is no space in pipelines to bring the oil to market. Instead, it is being transported to refineries by rail and truck. Drilling companies have had to erect camps to house workers.
Unemployment in North Dakota has fallen to the lowest level in the nation, 3.8 percent -- less than half the national rate of 9 percent. The influx of mostly male workers to the region has left local men lamenting a lack of women. Convenience stores are struggling to keep shelves stocked with food.
The Bakken and the Eagle Ford are each expected to ultimately produce 4 billion barrels of oil. That would make them the fifth- and sixth-biggest oil fields ever discovered in the United States. The top four are Prudhoe Bay in Alaska, Spraberry Trend in West Texas, the East Texas Oilfield and the Kuparuk Field in Alaska.
The fields are attracting billions of dollars of investment from foreign oil giants like Royal Dutch Shell, BP and Norway's Statoil, and also from the smaller U.S. drillers who developed the new techniques like Chesapeake, EOG Resources and Occidental Petroleum.
Last month China's state-owned oil company CNOOC agreed to pay Chesapeake $570 million for a one-third stake in a drilling project in the Niobrara. This followed a $1 billion deal in October between the two companies on a project in the Eagle Ford.
With oil prices high and natural-gas prices low, profit margins from producing oil from shale are much higher than for gas. Also, drilling for shale oil is not dependent on high oil prices. Papa says this oil is cheaper to tap than the oil in the deep waters of the Gulf of Mexico or in Canada's oil sands.
The country's shale oil resources aren't nearly as big as the country's shale gas resources. Drillers have unlocked decades' worth of natural gas, an abundance of supply that may keep prices low for years. U.S. shale oil on the other hand will only supply one to two percent of world consumption by 2015, not nearly enough to affect prices.
Still, a surge in production last year from the Bakken helped U.S. oil production grow for the second year in a row, after 23 years of decline. This during a year when drilling in the Gulf of Mexico, the nation's biggest oil-producing region, was halted after the BP oil spill.
U.S. oil production climbed steadily through most of the last century and reached a peak of 9.6 million barrels per day in 1970. The decline since was slowed by new production in Alaska in the 1980s and in the Gulf of Mexico more recently. But by 2008, production had fallen to 5 million barrels per day.
Within five years, analysts and executives predict, the newly unlocked fields are expected to produce 1 million to 2 million barrels of oil per day, enough to boost U.S. production 20 percent to 40 percent. The U.S. Energy Information Administration estimates production will grow a more modest 500,000 barrels per day.
By 2020, oil imports could be slashed by as much as 60 percent, according to Credit Suisse's Morse, who is counting on Gulf oil production to rise and on U.S. gasoline demand to fall.
At today's oil prices of roughly $90 per barrel, slashing imports that much would save the U.S. $175 billion a year. Last year, when oil averaged $78 per barrel, the U.S. sent $260 billion overseas for crude, accounting for nearly half the country's $500 billion trade deficit.
"We have redefined how to look for oil and gas," says Rehan Rashid, an analyst at FBR Capital Markets. "The implications are major for the nation."
This must be prevented at all costs.
I'm shocked at how short sighted some people can be. Our president being a pefect example.
Barry must be upset over this news. The EPA will be directed to stop it before it gets out of hand.
Moratorium in 3, 2, 1......
Fracking to be outlawed in 5, 4, 3,...
This is great BUT if you live in an area that has all these people and equipment moving in, it can be depressing. I know. I live in NE PA and we are in a gas drilling frenzy here. Our whole way of life has changed. It’s been invaded by white pick up trucks, dump trucks and water trucks with license plates from Oklahoma, Texas, Wyoming and North Dakota etc. You wouldn’t believe the difference. The thing is...I don’t mind that they’re here but there have been problems with water wells and the gas companies just won’t admit it’s their fault. It’s simply amazing. After talking with some workers, I found out that many of the people coming to our are were told that this was a “depressed” area and that you know...the people aren’t that smart....that type of thinking doesn’t exactly make you want to accept all these people with open arms!! Anyway, they’re here to stay and drill and run us off the roads! So we’ll have to put up with all of it but our quiet, lovely mountains will ever be the same. At least not in my lifetime!
“This must be prevented at all costs.”
I am sure Ken Salazar is working overtime to find a statute that will enable him to shut this down as soon as possible.
ANOTHER new drilling method? Every day they come up with a new method.
Well, every day another story is posted about a new drilling method.
Any oil and gas types here know how sustainable these fields are? I heard the nat gas fields start strong then taper off fast.
They’ve talked about shale for years. In Colorado they were experimenting with cooking it out with heat. Jimmy Carter talked about it his state of the union addresses.
Now all of a sudden, it’s viable? Not sure what changed other than market price. Did the engineers a generation ago not think of this?
Would you prefer that they came from Mexico instead?
there have been problems with water wells and the gas companies just won’t admit it’s their fault.
There has been one documented case of groundwater being contaminated from a Cabot well. The rest is just propaganda put out by the commies to deter development.
After talking with some workers, I found out that many of the people coming to our are were told that this was a “depressed” area and that you know...the people aren’t that smart....that type of thinking doesn’t exactly make you want to accept all these people with open arms!!
Doubtful, you are sitting on top of what may be the largest gas field in the world and the main reason that the development is going so slowly are the stringent regulations that the state imposes. New York is even worse.
Actually, the writer hasn't done their homework. The Bakken was drilled horizontally in the mid-80s,only the shales were the target instead of the reservoir rocks in the Middle Bakken.
The current style of drilling has developed since roughly 2000, evolving from the shorter wells in the Elm COulee Field in Montana to the longer laterals being drilled in North Dakota now, but fracking has been used the whole time, and is a process which was used in vertical wells some 60 years ago.
There have been technical developments and refinements, to be sure, but the whole process is nowhere near as young as the writer makes it out to be.
As for young men lamenting the absence of women, etc., someone needs to put down the crack pipe.
Many of the peopl who came here during this boom either brought their families with them or live elsewhere and work here.
The stores have been able to keep up, with the possible exception of being able to hire stockers because the able of mind and body have gone after a better paycheck.
The shortage here is in housing.
As for elsewhere, it was success in formations like the Bakken which has led to reevaluation of methodologies used and formations which present potential targets now with the technological developments which have occurred here. The Niobrara is just one which shows promise.
Oil engineers are applying what critics say is an environmentally questionable method developed in recent years to tap natural gas trapped in underground shale. They drill down and horizontally into the rock, then pump water, sand and chemicals into the hole to crack the shale and allow gas to flow up.
Again with the environmentally questionable and recent bit, which are laying the mental groundwork in the masses for the EPA to shut down something which has been done here in the Williston Basin, in the Bakken Formation for over a decade, with no ill effects on surface aquifers and no environmental damage.
I wonder who the "critics" are, and why they have ignored two casing strings and the cement--all tested--which seperate the wellbore from any near-surface aquifers?
This is subtle, but designed to foster the impression that somehow this is a new and environmentally dangerous process, which (at least here) it is not.
All shale plays have a high decline rate but the Bakken Shale wells, having much higher permeability, aren’t quite as bad.
The rock is totally different in western Colorado. It is essentially immobile oil encased in rock and behaves more like asphalt. The rock is mined and basically cooked to get the oil out. These new plays are in rocks where the oil is actually present and within the pore spaces and is mobile. The problem is that shales have inherently low permeability due to the small size of the pores and it is difficult to get the oil to move to the borehole.
We've reached a new level of oil glut.
The usual lies have not been able to prop up local gouge levels.
For the last month or two it's been , "Oh , my, this or that will cause gas prices to rise, oh , my..."
Meanwhile, at the pump, up & down a penny or two, basically nothin'.
I know an older gentleman who has patents on all sorts of petroleum related processes. We were chatting about the methods for extracting in the Bakken and he said that the process is not anything new but has been improved. He told me that there is easily a trillion barrels in shale and that the process is very safe as far as water goes. He said almost exactly what you did. This guy is very very smart and has invented a lot of things used by the petroleum industry. Someone brought up water contamination during our discussion and my old friend drew the way things work on a napkin and totally blew away the water issue.
If we simply opened up drilling like this, built some nuke plants, new refineries and did a short list of other things the economy would go off the scale. Unfortunately, Obama and Company are intent on killing America. In the short term they may come close but in the long term they will not be successful. In the meantime things are going to get rough.
Quick, get Salazar in there to “cement cap” this thing before it succeeds!
Just wait until we have rolling blackouts in the rest of the country, natural gas service failures (because compressors went down when the power was cut), etc. to sustain the 'model city' electric vehicle plug-in kiosks.
In winter, this could get particularly ugly, especially at this latitude.
People will die because of this nonsense.
In reality, the Bakken is not a true shale reservoir but more of a hybrid. Think of it as a sandwich where the bread is composed of two, high-quality oil source rocks, which is the Bakken. The meat is a dolomitic siltstone (think of it as a calcareous fine-grained sandstone) that has some porosity but poor permeabilty due to its small grain size. Each of these members is approximately 15’ thick at depth of around 8000’. The lateral is drilled within the “meat” about a mile or so out and the well is fraced, allowing the shales above and below to contribute to the production.
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