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Even before the April 2010 Gulf of Mexico oil rig explosion and spill, gas production from U.S. shale formations had dramatically increased output and lowered prices for that clean-burning fuel.

Now, with oil-related activity in the Gulf having declined -- and the timing of a full-scale resumption open to debate -- more of the unconventional gas drilling in U.S. shale formations has been switched to a quest for oil. This activity is anything but temporary: Oilfield services company Baker Hughes (NYSE: BHI  ) says that the number of units looking specifically for oil in the U.S. has nearly doubled in the past year.

On the gas side, you're likely familiar with such plays as the Barnett shale in Texas, the Haynesville in Louisiana, and the Marcellus in the nation's Northeast. Most of these formations appear largely limited to natural gas. However, the Eagle Ford, which spreads across much of east Texas, from Dallas to Houston and San Antonio and down into Mexico, was the star of the oil-and-gas combination in 2010.

Fully 47% of operating U.S. rigs are drilling for oil, and the Eagle Ford contingent is expanding. In the lead is Chesapeake (NYSE: CHK  ) , with about 550,000 acres, followed by Apache (NYSE: APA  ) , which is second in the acreage race. One of the early surprises in the play occurred when Petrohawk Energy (NYSE: HK  ) was drilling for natural gas, but hit oil that yielded more than 9.1 million cubic feet per day.

Then there's the Bakken formation, located largely in North Dakota and Montana. The formation currently produces about 400,000 barrels of crude per day -- a rate that could double -- and generally is thought to contain about 4.3 billion barrels of oil. However, some estimates (which I'm inclined to salt liberally) place the total at more than five times that amount.

The big daddy among Bakken producers is Oklahoma-based Continental Resources (NYSE: CLR  ) , which has 23 rigs operating there en route to its normal 22 wells per month. Second place is held down by Denver's Whiting Petroleum (NYSE: WLL  ) , which typically operates 15 to 20 rigs in the play.

Current oil production from these unconventional sources amounts to about 500,000 barrels a day. But given the rate of success in the plays, that number could triple by 2015. For the sake of perspective, the latter amount would equal about 30% of our country's total production and would likely match the amount being generated by the Gulf of Mexico.

Looking at the companies involved in this onshore quest for oil, I'm inclined to focus on Chesapeake. The company remains a major gas producer -- a position I'm convinced will benefit it sooner than expected -- and its Eagle Ford leadership only adds extra pizzazz. 

Chesapeake Energy is a Motley Fool Inside Value recommendation. Motley Fool Alpha owns shares of Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Fool contributor David Lee Smith doesn't own shares in any of the companies named above.  The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (11)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 17, 2011, at 5:48 PM, Mohawk1510 wrote:

    Struck oil that yielded 9.1 million cubic feet. The last time I looked, oil was measured in barrels. Just an example of the sloppy stuff MF puts out.

  • Report this Comment On April 02, 2011, at 4:29 PM, dickgaut wrote:

    Re: Eagle Ford Shale in the Dallas/East Texas Field area. What do the exploration prospects look like in this area. Since the original East Texas Field area has become depleted, what is the outlook for the Eagle Ford Shale/Woodbine exploration prospects of going back into these old areas for redevelopment as part of the Eagle Ford Shale play. If there is a play going on in this area, what companies are involved in this area.

    dickgaut, Kirkland,AZ

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