Everyone is familiar by now with the unconventional (shale) gas revolution in the US, which has transformed US and global gas markets. Less well known to the wider public is that an unconventional (shale) oil revolution is also gathering pace, with equally far-reaching implications.
It is not unlikely that the US, the world’s largest crude oil importer, could go a long way towards self-sufficiency by 2035. This would drastically change the global energy equation.
After many years of steady decline, US oil reserves recorded a sudden boost in 2009 (figure 1: United States Oil Profile). Similarly US oil production went up after years of gradual decline,and has grown quite rapidly over the last three years.
Thanks to this increase in domestic oil (shale oil and shale gas condensate) production and also a reduction of oil consumption, US oil import dependency has also gone down in recent years (figure 2: US historical field production of crude oil and US imports of crude oil (000 B/D) & figure 3: US Oil import dependency – historical trends). After peaking in 2006 at over 66 per cent, overall US oil import dependency declined to about 60 percent in 2011. Import dependency for crude oil was down to 47.36 percent at the end of 2011 from about 50 percent in 2008. During most of the eighties, US crude oil import dependency was between 20 and 30 per cent before rapidly moving upward.
So what happened? Through the use of technology, US oil and natural gas operators are converting previously uneconomic oil and natural gas resources into new proved reserves and production. Shale oil has historically been difficult and costly to produce because it is found in formations characterized by both low porosity and low permeability. The technology first used to extract natural gas from shale rock in the Marcellus and other shale gas plays has now been fine-tuned and modified to extract oil from shale formations across the country, such as the Monterey play in California, the Barnett and Eagle Ford in Texas, and most notably the Bakken in North Dakota.
At the Barnett in Texas, overall liquids production more than doubled (and production from horizontal wells swelled roughly six-fold) from 2005 to 2010. Production from Woodford in Oklahoma surpassed 2750 barrels per day (b/d) in 2009, up 83 percent compared to 2008. At the Eagle Ford, where the first well was drilled only three years ago, liquids production in 2009 grew more than five-fold over the previous year, and is expected to produce more than five million barrels in 2010. Liquids production from the Marcellus shale nearly quadrupled in 2009 and is expected to show another considerable increase in 2010.
