The de facto Obama moratorium on oil well drilling in the Gulf of Mexico has spurred new exploration and production on the US mainland. Local economies are beginning to experience boom times never experienced before. It is a phenomenon that may well spread across the US, as the oil & gas mania locates useful hydrocarbons wherever they are to be found.
For much of this decade, energy companies pioneered new drilling technologies that allowed them to recover natural gas from a subterranean rock called shale. By drilling down and then out laterally, companies were able to exploit greater areas of the shale. And by injecting massive doses of water, sand and chemicals into the ground, they could crack open the gas-bearing rocks, allowing gas to flow to the surface.
...The shale boom won't begin to end American dependence on imported oil, but industry experts say it is driving a significant and potentially enduring shift in the way oil is produced domestically.
"It's a game-changer for U.S. oil production," said Bill Durbin, head of global markets research at Wood Mackenzie. "The U.S. has always been perceived to be a very mature oil province with relatively little prospect for growth. Now we're seeing the declines in production being arrested by the increase in unconventional oil."
Nationally, the balance between oil and gas exploration onshore has tilted heavily toward oil. The number of oil-seeking rigs has nearly tripled since June 2009, and now makes up 42% of all rigs in use, a prevalence not seen since 1997, according to data compiled by oilfield-services company Baker Hughes Inc.
Among states, Texas has seen the greatest increase of rigs in the past year, adding 300, a 73% increase. North Dakota added 83 rigs in the last year, Oklahoma gained 71, and Colorado picked up 30. Analysts at IHS Cambridge Energy Research Associates have identified 20 significant shale prospects across North America.
Industry executives and analysts say the growth is likely to continue, at least as long as oil prices remain over $70 a barrel. _WSJ
Yes, this boom is likely to continue for as long as oil prices remain over $70 a barrel. In other words, as long as demand continues, the supplies will be located -- sometimes where you least expect them.
The Obama - Holdren - Salazar - Boxer coalition of energy starvation will not control the US government indefinitely. When the left-Luddite Malthusians are finally swept from power, a wider array of energy options will be placed upon the table for consideration.
When the energy markets are opened up, it is possible that demand will be insufficient to maintain oil prices at current inflated levels. Sure, the value of the dollar will continue to decline as long as US debt expands exponentially -- which drives the price of commodities higher, when priced in US dollars.
But other, more stable measures of value will come into more widespread use. When priced in more stable currencies, the price of oil is likely to fall in the long run, rather than rise.
Cross published to Al Fin Energy
Brian Wang has more on North Dakota, Alberta, and large global shale energy plays
More 14Nov10: Tim Worstall makes a very good point about the proliferation and expansion of new production technologies. The same type of rapid expansion of exploitability of resources occurs on many levels -- from the most rarified and abstract theory to the most rudimentary and basic in-the-field innovation. Between those extremes lies a multitude of fertile levels for innovative change. Here is an interesting article that Tim points to, reinforcing Brain Wang's point above.
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