As Money Morning reported Nov. 27, fracking technology has opened vast shale oil and gas fields that previously had been uneconomical to exploit.
With rapid growth in recent years, so-called unconventional oil has accounted for about 2 million barrels per day of production in 2012.
In Oklahoma, where oil was discovered in 1897, conventional oil production peaked in 1927, and the state's fields were thought to be exhausted.
Oklahoma's main field, the Anadarko Basin in the western half of the state, has yielded most of Oklahoma's oil and natural gas in recent years.
Now drillers are targeting the basin's Woodford shale layer.
One of the Most Unknown -and Promising - Shale Oil Fields One of the companies drilling in the Woodford shale layer is Continental Resources (NYSE: CLR), who told Reuters the site is "one of the thickest, best-quality resource shale reservoirs in the country."
Continental is known for its success drilling in North Dakota's Bakken, one of the best-known shale oil fields.
At 3,300 square miles in area, the Woodford shale layer is smaller than the 13,000-square-mile Bakken shale oil field or the 5,000-square-mile Eagle Ford field in Texas. But the Woodford shale reservoir is thicker, at 150 to 400 feet thick, compared with Eagle Ford at 100 to 250 feet and Bakken at 10 to 250 feet.
The U.S. Geological Survey estimates Woodford contains 400 million barrels of recoverable oil. The site is also believed to contain 250 million barrels of condensates and lots of natural gas.
Continental Resources is one of the bigger players in the Woodford reservoir. The company has increased its acreage holdings in Woodford at an even faster rate than it has in the Bakken. From 2009 to October 2012, Continental's net acreage in Woodford rose 1135 to 316,000 acres while its net acreage in the Bakken increased by 51% to 915,000 acres.
Shale Oil: Moving South from the Bakken Another developing shale oil play that is relatively unknown - the Tyler formation - is in the Dakotas.
The Tyler formation (called Minnelusa in South Dakota) lies about a half-mile above the Bakken. It stretches from western North Dakota into northwestern South Dakota. Geologists believe the formation has some characteristics similar to Bakken, which bodes well for its prospects.
Current estimates are that Tyler holds approximately one-third of the volume of oil as the prolific Bakken.
Lynn Helms, the director of North Dakota's Department of Mineral Resources, told the Associated Press about the potential of the Tyler: "We think it could be a couple of years before they unlock the secret of drilling the Tyler. In our mind, we look at this as the equivalent of Bakken test wells in 2004."
With potential development several years away, mainly small players have speculated in South Dakota acreage. One example is the small Texas-based driller, Bedrock Oil & Gas Company.
But the big players in the Bakken, including Continental, Hess (NYSE: HES), EOG Resources (NYSE: EOG) and Whiting Petroleum (NYSE: WLL), may be tempted to move a few miles south over the border into South Dakota.
This may be especially true of Continental Resources. The company's Red River plays already straddle the borders of North Dakota, South Dakota and Montana.
If Continental does decide to move into South Dakota in a serious way, adding that to Bakken and its aggressive moves in the Woodford will give it quite a portfolio of U.S. shale oil assets.
Companies banking on shale oil profits will benefit from higher prices in 2013 - see why they can expect oil to soar.
Related Articles and News:
- Money Morning:
In Search of the Next Bakken Shale Oil Field
Oklahoma gears up for next big shale play: John Kemp
- Bloomberg Businessweek:
North Dakota's booming oil patch swelling south
- Oil Investing News:
Could South Dakota Host the Next Bakken Oil Formation?
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