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30th Annual Review of Developments in Business Financing -- Focus on the Oil and Gas Energy Patch
New technologies have transformed the oil and gas industry and led to a revival of oil and gas production in the Western Hemisphere. From western Canada to Brazil, these new technologies are being applied to unlock petroleum sources that were previously uneconomical: shale gas and shale oil (also called “tight oil”) in the U.S, oil sands in Canada, and deep-water oil in the U.S. Gulf of Mexico and Brazil.
In the U.S., horizontal drilling and hydraulic fracturing (injecting high-pressure water into shale rock formations, called “fracing” in the industry) technologies are used to extract oil, natural gas and natural gas liquids from shale formations. The Barnett Shale in north central Texas was the first major shale formation where these two technologies were first successfully combined, followed by other fields, including the Fayetteville Shale in north central Arkansas and east central Oklahoma, Haynesville Shale in northeast Texas and northwestern Louisiana, the Eagle Ford Shale in South Texas, the Marcellus Shale in Pennsylvania (a “truly enormous, national wonder extending from New York to Tennessee along a swatch of territory larger than Greece” 2), the Utica Shale which extends from New York to Pennsylvania, West Virginia and Ohio, the Woodford Shale in Oklahoma, and the Bakken Shale Oil Field in North Dakota. Production in the Bakken is expected to make that state the third largest oil producer after Alaska and Texas.
The rapid development of these new oil and gas plays has spurned an energy renaissance in the U.S. As early as 2001, shale gas constituted less than two percent of the total U.S. natural gas production; as of mid-year 2011, that number had sky rocketed to nearly thirty percent. These shale oil and gas plays are estimated to constitute nearly thirty percent of recoverable hydrocarbon reserves in the United States.
And those estimates are expected to increase.Presented at the American Bar Association Section of Business Law Spring Meeting, March 2012. To read the full paper, click on the PDF linked below.