U.S. on new track to catch Saudis in oil production

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Workers at an oil operation in Weld County, Colo.
CBS News

(CBS News) GREELEY, Colo. - Despite rising gas prices, oil production is surging in this country. That has some predicting the U.S. could eventually overtake Saudi Arabia as the world's largest petroleum producer by 2020.

In the middle of a Colorado cornfield, sandwiched between cattle and farm houses, is the front line of an American oil boom.

"We plan to invest over $8 billion over the next five years here, so we're really excited," said Mike Dickinson, who works for Noble Energy, which is doubling it's production in Weld County.

This oil field stretches from Colorado into Wyoming. In 2008, it produced more than 83,000 barrels of oil. Yet this year it is expected to reach nearly 10 million barrels.

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The technology being used is "unrecognizable today compared to what we were doing just two or three years ago," Dickinson said.

Oil companies used to mainly drill vertical wells hitting one pool of oil. But now they are rapidly converting to horizontal wells up to a mile long, and combining them with fracking operations which splits open rocks releasing oil once considered out of reach. One drilling rig can now install multiple wells in the same location, making it more cost efficient.

A horizontal well produces seven to 10 times more oil than a vertical well.

"Today we're not running any vertical rigs and we're running eight horizontal," Dickinsons said, added that this is the future of the business.

The industry insists fracking is safe but is worried about an upcoming EPA report that could heighten environmental concerns over water contamination from fracking -- and the 2 to 10 million gallons of fresh water it takes to operate one horizontal well.

"Once that water goes into the ground and is mixed with the other chemicals, it's poison essentially. It has to be disposed of," said Jason Bane of Western Water Advocates. "The overall concern is we don't know enough to be going ahead this quickly with fracking."

The technology is dramatically boosting overall U.S. oil production, which is up 25 percent since 2008 and is expected to jump another 30 percent by the end of this decade. The oil boom has created 1.7 million jobs.

It's also made places such as Greeley, Colo., flush with cash.

"This really has been a godsend to our county," said Sean Conway, a commissioner in Weld County, where 50 percent of the budget is now funded by oil and gas taxes.

"It allows us to pay for things in cash," Conway said, adding they now very much like their friends in the oil and gas industry.

Out in the cornfields, the drilling continues, another 11 million barrels per day closer to catching the Saudis and the Russians.