The horizontal drilling and hydraulic fracturing techniques used to tap natural gas production from shales is beginning to "transform" the oil industry, according to a market analysis issued on Monday by Bentek Energy LLC.
In its report, "The Rush to Unconventional Oils," the Evergreen, CO-based consultant detailed how the techniques now are unlocking shale oil in several plays across the United States, including the Bakken and Niobrara in the Rockies; the Bone Springs/Wolfberry, Granite Wash and Eagle Ford plays in and around Texas; and the liquids-rich shales in the southwestern part of the Marcellus.
In the past year alone Bakken oil production "has rocketed up 79%, moving North Dakota into position as the nation's fourth largest oil producing state," the report noted. Oil output in the Rocky Mountains is forecast to double in the next 10 years.
"The growth trend in unconventional oil looks strikingly similar to what we saw in the early stages of natural gas shale production," said Bentek Managing Director E. Russell (Rusty) Braziel. "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."
Several of these liquids-rich regions lack adequate gathering, processing and transportation infrastructure to move oil production to market, Bentek noted.
"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."