Now that the energy industry is done marveling at the shale gas revolution and is believing in abundant gas supplies for years to come, a similar North American supply renaissance is in the making in crude oil, Bentek Energy LLC's Jim Simpson told attendees at GasMart 2011 in Chicago Wednesday.
"It's coming and it's coming almost as quickly as what we call the shale revolution..." said Bentek Vice President Simpson.
The Cushing, OK-Brent oil price spread has blown out, thanks to the turn to oil and natural gas liquids-rich plays by North American natural gas producers. By the end of 2016 the U.S. could be back to 1985 oil production levels.
"You'll be hearing more and more over the next 12 months about North American crude oil...Natural gas producers are really turning back into crude oil producers," Simpson said.
Simpson cited the Permian Basin as an example of how things have shifted. While Bentek used to believe that Permian natural gas production was in decline, that's not the case any longer. Producers targeting oil in the Permian are producing enough associated natural gas -- essentially for free, thanks to liquids economics -- to keep Permian gas production levels flat, Simpson said.
Simpson said what's going on with North American oil feels "a lot like the shale revolution did in early 2008. I remember several times getting kicked out of people's offices for saying, 'Be careful; gas is going to grow rather quickly...'"