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The number of new oil and gas wells has remained fairly steady in the last several years, but output has risen dramatically thanks to an increase in production – the opposite of energy boom skeptics’ predictions.
Oil production has increased fivefold in the last ten years, the result of improved technology and shift in priorities by the oil and gas industry. Instead of seeking out new shale formations and expanding the number of wells in production, producers are focusing on pulling everything they can out of identified formations.
An example of the results: a well in the Bakken Shale of Montana drilled in 2003 peaked at an output of just over 800 barrels a day. A newer well, drilled last year in the Eagle Ford formation in Texas, peaked at nearly 3,000 barrels a day.
There are pros and cons to the increased productivity of the oil and gas industry. One important pro: as a top natural gas producer, the United States has been able to keep the price of gas low. However, that same low price can negatively impact drillers who are investing more resources into bigger and better wells.
Hydraulic fracturing (fracking) operations also pose a significant risk to the ecosystems surrounding the shale formations being extracted. Toxic fracking liquids can seep into the surrounding ground and contaminate drinking water supplies that are already depleted from their use in fracking. Also, excessive drilling can shift the ground formation and make the area unsafe.
As extraction technology improves, previous predictions of slowed output could be proven very wrong.
With the oil and gas industry booming, now is the time for service providers to cash in. If you need a steady flow of working capital to support your oil and gas business, Factor Finders’ oil and gas invoice factoring programs may be just what you need. Contact Factor Finders to learn more about oil and gas factoring and to request your free quote for service.
