If you don’t feel a little spoiled right now during the tight oil boom taking place in the United States, just remember the story of David Harold “Dry Hole” Byrd.
As a geological consultant back in 1925, he earned his unfortunate nickname after drilling 56 dry holes before finally striking oil in two of his wells.
But he wasn’t alone. Even one of the most prominent figures in Texas’ oil and gas industry, T. Boone Pickens, famously quipped, “You will not find a person who has drilled more dry holes than me. Not one person. But I rank in the top 10 of those who have found the most oil.”
Well, the drilling landscape has radically changed since those early days, with hardly a dry hole in sight.
Perks of Joining the 10% Club… By the Numbers
In places like North Dakota, for example, Lynn Helms boasted over a year ago that 99.9% of the wells drilled into the Bakken produce oil — with at least 80% of those being profitable. He even mentioned that fewer than 20 wells drilled during the last eight years went bust.
There’s a similar feeling of success in David Byrd’s home state of Texas. The Railroad Commission of Texas reported last month that operators completed 3,131 completions and zero dry holes.
Today, three out of every ten barrels of oil produced in the U.S. are pumped from tight oil plays.
We’re talking about 3.22 million barrels out of the 7.84 million barrels of oil produced on U.S. soil during the last quarter of 2013. And as the EIA recently reminded us, nearly two-thirds of this output is from just two plays: the Bakken and Eagle Ford.
For the first time in decades, we once again account for more than 10% of total global production… and this oil boom has been paying off in spades.
Jobs, Jobs, and More Jobs
Although you and I both would be hard-pressed to find a thriving sector in the U.S. since 2008, we saw the benefits of a full-blown oil boom firsthand after the U.S. Census Board released its economic census report a few days ago.
Not surprisingly, the mining, quarrying, and oil and gas extraction sectors led the pack in job growth between 2007 and 2012. During that time period, the number of employees in those sectors grew nearly 24% to slightly more than 900,000.
The report breaks things down even further, with the number of oil and gas jobs growing 27.3%, adding more than 41,000 employees during that five-year span. And on an interesting note, excluding oil and gas extraction from the mining sector would result in a slight decrease of about 3,200 jobs.
Of course, this is also on top of the 2.7% unemployment rate North Dakota is currently enjoying.
And this black gold rush is turning more profitable by the day.
Opportunities Abound
Also found in the Census Bureau report is the value of each respective sector in terms of sales, shipments, receipts, revenue, or business done.
And within the five-year period between reports, value in the oil and gas extraction sector grew 30% to $332.9 billion.
In other words, our economy is growing on the back of the tight oil boom — and this frack game is just beginning to heat up.
North Dakota’s crude production is projected to top 1.6 million barrels per day in 2017. Thanks to two blockbuster plays, Texas will soon be producing over 3 million barrels per day.
And state coffers aren’t the only beneficiaries, either.
Below, you can see how two top producers in these two states — Continental Resources and Pioneer Natural Resources — have performed for shareholders during the five years.
But as I’ve mentioned time and again, companies are striking oil wherever they put their drill bits, and yet it’s still not enough to completely free us from foreign oil. Remember, we may have been producing 7.84 million barrels by the end of 2013, but we were also importing 7.7 million barrels of crude, too!
You see, it doesn’t necessarily come down to how much oil a company has underground — rather, whether it can effectively extract it.
And you can bet that the next stage of the U.S. oil and gas boom will be a result of drilling technology.
To find out more about these emerging shale plays, click here.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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