Turns out that horizontal hydraulic fracturing, the process used to get natural gas from shale layers, is also a renaissance for oil production as well. According to the latest figures, the number of rigs drilling for oil in the U.S. has just surpassed the number of rigs drilling for natural gas—for the first time in 18 years—thanks to fracking.
Natural gas drilling has been the dominant energy story in the U.S. for the past few years, but oil is back with a vengeance.
For the first time in 18 years, the number of oil rigs working in the U.S. has exceeded the number of natural gas rigs, according to July rig data compiled by IHS-CERA, covering both land and offshore rigs.
By 2020 this surge in oil drilling could increase U.S. oil production by as much as 3 million barrels per day, Peter Stark, head of IHS-CERA’s industry relations said Wednesday during a session launching the start of Summer NAPE, the semi-annual oil and gas prospects expo being held in Houston.
Two factors are spurring the surge in oil production.
The combination of horizontal drilling and hydraulic fracturing, which has unlocked previously inaccessible gas, also has opened up new possibilities for oil production.
Relatively low natural gas prices have prompted companies to focus exploration efforts on more valuable oil and natural gas liquids.
Oil actually may have returned to the top of the heap among U.S. drilling rigs earlier this year, according to another data set. Baker Hughes’ rig count for onshore and offshore rigs has oil surpassing natural gas on April 21, (913 oil rigs vs. 878 gas rigs) for the first time since April 28, 1995 (343 oil rigs vs. 321 gas rigs).
And on June 24 the number of rigs drilling for oil surpassed the 1,000 mark for the first time since 1987.
IHS-CERA predicts oil production could directly and indirectly generate another 1.3 million U.S. jobs over the next decade and raise an additional $97 billion in federal taxes and royalty payments.
The oil boom is showing up in well-known U.S. oil fields, like Texas’ Permian Basin, and in newer fields like North Dakota’s Bakken shale and the Utica shale in Ohio.
The surge could slow if natural gas prices continue to rise and make gas projects more attractive — which many analysts expect in the next year.*
*Houston Chronicle (Aug 18, 2011) – Gas boom or not, more oil rigs now