Fracking boosts domestic oil to an annual gain

Fracturing deep rocks with water and chemicals, the drilling technique known as "fracking," has been in the news because of its use to get natural gas, but it is also boosting the U.S. oil industry. Drillers "drill down thousands of feet and then turn and go horizontally through the gas-bearing rock—allowing a single well to reach more gas," Ben Casselman of The Wall Street Journal writes from Killdeer, N.D. (WSJ map) While oil molecules are larger than gas molecules, and don't flow as easily through the cracks, several companies thought the same process could work on oil-bearing formations, and they were right.

Companies including EOG Resources Inc. are fracking the Bakken Shale in western North Dakota. "The first three or four wells, it was not clear that there would be a viable economic solution," EOG Chairman and CEO Mark Papa told Casselman. "But we just felt like, well, it's worth investing $20 to $40 million in this because if it works there's a huge upside." By 2006, EOG was turning a profit on its Bakken wells and in the past two years companies have "honed drilling techniques, leading to bigger wells, faster drilling and lower costs," Casselman writes.

The new Bakken oil production, along with big discoveries in California and the Gulf of Mexico helped the U.S. post its first yearly oil production rise in 2009, for the first time since 1991. The boom is having a measurable impact on rural communities near the wells. Several ranchers have turned millionaires after leasing their land, Casselman reports. "Oil-field workers have flooded the western city of Williston, leaving it with a chronic shortage of hotel rooms and making housing scarce," Casselman writes. "In Dickinson, three hours to the south, a labor shortage has the local McDonald's offering $300 signing bonuses." (Read more)