The "North Dakota effect" – and fracking in general – has been a game changer in the oil market as most long time readers should be well aware of by now. The WSJ has a piece this morning noting U.S. oil production is now almost at 15 year highs – this is definitely one of the secular bull markets in the U.S. economy and an advantage the country has over many in Europe or Japan.
- U.S. crude-oil production reached its highest level in nearly 15 years in September, thanks in large part to the drilling method known as hydraulic fracturing, the U.S. Energy Information Administration said Tuesday. Daily production averaged nearly 6.5 million barrels, the EIA said, an increase of 16%, or about 900,000 barrels, over September 2011.
- The last time monthly U.S. production reached 6.5 million barrels a day was January 1998. The EIA said the states with the largest increases were Texas, with its Eagle Ford formation, and North Dakota, at the center of the Bakken Shale region. For decades, North Dakota produced fewer than 150,000 barrels a day, but that figure started surging in 2007 and reached 728,000 barrels a day in September.
- The revolution in U.S. energy production is due mostly to hydraulic fracturing, commonly known as fracking. When coupled with horizontal drilling techniques, fracking has allowed energy companies to tap into shale formations and release pockets of oil and natural gas that had been considered unreachable.
- .The U.S. oil boom has some limitations. Fracking relies on relatively high oil prices to be economical, while major producers such as Saudi Arabia have access to huge reserves of cheap oil. The IEA predicted that after 2020, Saudi Arabia and other producers in the Organization of the Petroleum Exporting Countries will control a larger share of the global oil market.
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