Photo credit: Flickr/Paul Lowry.
Continental Resources, Inc. (NYSE:CLR) CEO Harold Hamm has a dream that one day the United States will be energy independent. What’s truly remarkable about the dream is that there is enough science and technology that could make it a reality. In fact, according to Hamm and others, the U.S. could be the world’s top oil producer by 2017, in addition to being completely energy independent by 2020. Can this really be true?
Consider: Texas produces enough oil that if it were a country, it alone would rank 15th in the world among oil-producing nations. The state, of course, has the prolific Eagle Ford Shale as well as legacy oil production out of places such as the Permian Basin. In fact, when combined with the Bakken of North Dakota, these three oil plays have the potential to grow oil production by five million barrels of oil per day by 2017, which could potentially push the U.S. into the top spot.
To meet that lofty goal, the U.S. would need to drill a lot of wells, with estimates of about 100,000 total wells to get oil production up to full capacity, which is up from just 10,000 shale oil wells today. For perspective, that would mean oil companies would need to spend more than $600 billion given the average well cost of $7 million per well between those three major oil shale plays. Further, oil prices would need to stay at least above $65 per barrel to produce an adequate return for producers, though ideally oil would need to stay over $100 to truly give producers adequate incentive.
With oil prices currently well above $100 per barrel, oil producers have plenty of incentive to drill. Continental Resources, Inc. (NYSE:CLR), for example, has taken advantage of high oil prices to become the Bakken’s top producer and driller. The company sees the potential to drill more than 19,000 additional wells in that play, as well as its position in Oklahoma. That potential, when combined with high oil prices, is one reason Continental Resources, Inc. (NYSE:CLR) is expecting to triple its production by 2017.
It’s not alone, which is clear by going back to Texas, where the Eagle Ford has been one of the big drivers for EOG Resources Inc (NYSE:EOG). The company, which expects to grow its oil production by 28% this year, has a clear path to grow its oil production by double digits annually through 2017. Overall, the company sees the potential for 4,900 additional Eagle Ford wells, which will enable it to capture about 8% of the Eagle Ford’s entire estimated output.