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 risen above the number of natural gas rigs, according to July rig data compiled by IHS-CERA.
By 2020 this surge in oil drilling could increase U.S. oil production by as much as 3 million barrels per day, said Peter Stark, head of IHS-CERA’s industry relations during a session Wednesday to launch the beginning of Summer NAPE, the semi-annual oil and gas prospects expo being held in Houston.
The timing of oil’s return to the top of the heap among U.S. drilling rigs may have actually happened earlier this year according to other data sets – Baker Hughes’ rig count for onshore and offshore rigs has oil surpassing natural gas on April 21, 2011 (913 oil rigs vs. 878 gas rigs) for the first time since April 28, 1995 (343 oil rigs vs. 321 gas rigs).
But the surge is real and is expected to be sustained.
The surge in oil production is being spurred by two factors: the successful combination of horizontal drilling and hydraulic fracturing, and relatively low natural gas prices that spurred ompanies to focus exploration efforts on more valuable oil and natural gas liquids.
The oil boom interest is being seen in places like the Permian basin in particular, which has been among the most prolific U.S. oil fields over its many decades of production. It’s also expanded to other plays, such as the Bakken shale in North Dakota and the Utica shale in Ohio.
The oil boom is somewhat of a surprise to some in the industry.
During a recent meeting of the National Petroleum Council in The Woodlands, members of the group convened by the U.S. Energy Secretary to assess the U.S. natural gas reserves for an upcoming study said their conclusions were — not surprisingly — that the natural gas potential was enormous.
“Secondly, and perhaps surprisingly to some of us and certainly to many Americans, our Canadian and American oil resource base is also very big news,” said NPC member Susan Tierney.