After two decades of declining oil production, the US is seeing progressive increases in production of both crude oil and lease condensate since 2008.
Part of the oil production resurgence comes from the tight oil formations found in three key areas: the Permian basin in West Texas and southeastern New Mexico, the Eagle Ford shale area in Texas' Western Gulf basin, and the Williston basin in North Dakota, South Dakota, and Montana, which includes the Bakken formation.
Rise in production
The ability to combine horizontal drilling with hydraulic fracturing has allowed exploration and production companies' access to large volumes of oil within rock formations once not economically feasible to drill. These new technologies for drilling have opened a new array of oil production.
Most notably, North Dakota's crude oil production has increased an incredible 288% since January 2009. According to North Dakota's Department of Mineral Resources, the state's oil production for September was 728,494 b/d with just over 7,800 producing wells. It is noted that the number of producing wells increased 50% for the same time period. The escalating production has placed the Peace Garden State as the 2nd leading land producer of oil behind Texas, surpassing Alaska and California. The US Energy Information Administration forecasts that by January 2014, total Williston basin production will move toward 1.1 million b/d.
Texas' oil production has seen an increase of over 850,000 b/d since January 2009 with production at 1.132 million b/d and current numbers for August production jumped to slightly more than 2 million b/d.
The Permian basin has seen increased production from both conventional oil and shale plays. According to the Texas Railroad Commission, Permian basin production in 2011 accounted for nearly 71% of Texas' total statewide oil production and 14% of total US oil production. Currently there are nearly 82,000 active producing wells in the Permian basin.
The Eagle Ford shale play is producing 297,079 b/d through August vs. only 358 b/d in 2008. This shale area is very favorable for fracing due to the high percentage of carbonate that makes the shale more fragile. The Eagle Ford area is of significant importance due to its potential for both oil and gas.
EIA forecasts combined production from the Permian and Western Gulf basins will increase to 2.48 million b/d by January 2014.
Drilling shift
Currently the shift from drilling wells for dry gas to oil and wet gas implies that production of liquids will continue to rise. Many companies are investing in horizontal drilling rigs and positioning them in the tight oil plays.
The percentage of total rigs drilling for oil is about 75% based on weekly published figures from Baker Hughes Inc. The number of rigs drilling horizontally has grown from 362 in February 2011 to 1,104 at the beginning of November, the latest figure released at presstime last week. Horizontal wells, meanwhile, accounted for nearly 60% during the first part of November.
It is apparent that the shift to horizontal drilling is now the focus for producers targeting tight oil formations.
The geographical allocation of the rig count fleet to areas known for the tight oil formations, where fracing is helping to increase oil production are shown in the active weekly rig count. Baker Hughes Inc.'s most recent tally, for one, shows that North Dakota and Texas are leading other states in the number of rigs drilling for oil.
