Infographic: How 'fracking' works

"The key year was 2003," said Daniel Yergin , vice chairman of the energy consulting company IHS, referring to the first use of horizontal drilling combined with fracking. "That was when it was proof of concept. So for five years, it unfolded quietly with the independents. In 2008, that's when the majors got interested."

In 2003, there were 1,900 horizontal wells operating in the U.S. IHS estimates there were closer to 45,500 in 2012.

That has led to forecasts that once sounded far-fetched becoming reality: U.S. oil wells produced 6.4 million barrels of oil per day last year – the highest domestic production level in 20 years -- and are expected to yield 7.3 million barrels per day this year, according to the U.S. Energy Information Administration. The EIA recently increased its forecast for U.S. oil production to 8 million barrels a day by the end of next year.

"One thing I can say with absolute certainty…is that our long-term forecasts are going to be wrong," Adam Sieminski, EIA administrator, said in a recent speech. "It looks like the direction we're going ... on oil is there's going to be more of it."

At the same time, the U.S. imported about 7.6 million barrels per day in February, a decline of 1.3 million barrels per day from the same time last year. And in 2012, U.S. oil demand – 18.56 million barrels per day -- was down 2 percent from the previous year and at its lowest level since 1996, the EIA said.

If those trends continue, Yergin said, the U.S. will largely be able to wean itself off non-North American oil sources within a decade.

"The view I have is the U.S. will be a lot less dependent with Canada ," said Yergin, who also is CNBC's global energy analyst. "That will really reduce imports, combined with more fuel-efficient cars, reduce exports from outside North America. We'll still be importing some but it's certainly a rebalancing of global oil. That oil that was coming to the United States will go somewhere else and that somewhere else would be Asia."

Canadian production is expected to increase to 6.5 million barrels per day, and even Mexico is now expected to join the North America energy renaissance under a new government interested in exploiting its resources, according to Citigroup research.

Since 2006, U.S. oil field production of crude, plus natural gas liquids and bio-fuels has grown by 3 million barrels a day, about the same as the total output of Iran, Iraq, or Venezuela. In the same period, Canadian production has grown by 510,000 barrels a day.

Citigroup analyst Edward Morse, said in an interview that the U.S. could in theory need to import only from Canada within five years.

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Is This For Real?

Reports on the new oil and gas bounty have met with considerable skepticism. Some energy analysts are concerned that the new "unconventional" supply is limited and will be quickly tapped because some of the impacts of the new drilling are unknown and the history is so new.

The Oil Producing Export Countries, or OPEC , may have a competitive ax to grind, but in a recent release it questioned the U.S. forecast.

Others are worried that the drilling, most of which is occurring on private land, will create environmental problems and be blocked or stymied by new regulation. Still others fear that the phenomenon could lead the U.S. to export oil and gas, driving prices higher and squandering a rich resource.

But those with the most insight into production figures from what are known in the industry as "tight" oil and gas resources, a term derived from the difficulty in recovering them from the rock formations, say the critics fail to appreciate just how rich these fields are turning out to be.

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"There's a great expression in the oil business: 'Oil's been found where it's been found before,'" said Scott Tinker, director of the Bureau of Economic Geology at the University of Texas. "These big oil- and gas-rich basins already are producing from the conventional reservoirs that leaked off of the shale. Most of these big basins … have rich source rocks.

"The source rocks are the kitchen where the oil and gas are cooked before they leaked out into the conventional reservoir. We've drilled the conventional reservoir. There's still some to be drilled, but the kitchen is what we're drilling now, and it contains a lot more oil and gas than what was leaked."

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Tinker leads a group that just completed a comprehensive survey of a major natural gas field, the Barnett Shale in Texas, and is now studying the Fayetteville Shale in Arkansas, the Haynesville-Bossier field on the Gulf Coast and beginning to look at the Marcellus, which extends through Ohio, Pennsylvania and New York. He said that after the Barnett survey, which showed a cumulative 44 trillion cubic feet of recoverable natural gas reserves with production extending through the year 2030, he is more confident than ever about the supply.

The U.S. consumed 24 trillion cubic feet of natural gas in 2011 and Barnett supplied about 10 percent of that, the study said.

"It gives us tremendous confidence," he said. "It's real."

That confidence is reflected in the most recent estimates of U.S. oil and gas reserves.

Thanks to the new drilling techniques, an estimated 2,200 trillion cubic feet of recoverable natural gas in the U.S. – or a century's worth -- and billions of barrels of oil are now believed to be locked in rock formations, spanning from California to Pennsylvania, according to the EIA.

Similarly, the U.S. government estimated in 2010 that the U.S. had proven reserves of just 25.2 billion barrels of oil – or about four years' worth at recent consumption rates. The "tight oil," or unconventional oil supply, is believed to be double that amount, or about 58 billion barrels, according to John Staub, an analyst with the EIA.

That means the U.S. now is estimated to have total technically recoverable resources equaling 223 billion barrels when all potential offshore oil and in tight oil zones is taken into account, he said.

"In 2006, we were a little under 150 billion barrels, and it's kind of just slowly grown over time," said Staub of the technically recoverable oil. "The technology improves and changes our understanding of how much of the resource can be accessed."

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And that figure is likely to continue to grow, said Bob Dudley, CEO of the global energy giant BP , which in the last year has begun exploring in Ohio.

"At current consumption rates, the data suggests the world has 54 years' worth of proved oil reserves and 64 years' worth of proved gas reserves in place, and more will be found," he said in a recent speech.

While oil drilling is booming, the industry has reined in domestic natural gas production in recent years because the price is depressed, trading as low as about $3.60 per million BTUs on the NYMEX recently, way below its record high of more than $15 per million BTUs in 2005. But many experts say that will change quickly if the price starts ticking back upward or the costs of drilling decline, as anticipated by some industry forecasts.

Meantime, companies are benefiting from the abundance of oil and liquids found in some areas where they were looking for gas, and from being the global leaders in the use of new technologies that have made oil recovery a changed business.

Pete Stark, senior research director and adviser with IHS CERA , said the new techniques already enable outfits to cut costs, save on logistics and reduce surface impact, and are continuing to evolve.

"The plan is that they'll have one central drilling pad location for 3 square miles, and from that central drilling pad, they will drill six to eight horizontal wells in up to four different reservoir zones, going a mile and a half north, and the same thing a mile and a half south," he said, projecting how new drilling techniques are likely to be extended. "In the future, if the maximum number of wells ... possible are drilled, you could have 64 wells from one pad covering 3 square miles."

Stark, like others in the industry, said it's difficult for drillers to know just what they're going to find. But in many cases, he said, wells are producing more than anticipated. For example, Stark noted, he estimated last year that the Three Forks area in the northern Bakken Shale had one reservoir. "Now it looks like an additional two or a third lower reservoirs are also yielding commercial production," he said, noting that could mean an additional 5 billion or 6 billion barrels.

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Morse, head of global commodities research at Citigroup, credits independent oil and gas drilling companies with pioneering the rapid growth of the industry in the U.S. and Canada.

"The cost of entry is unbelievably low," he said. "... What distinguishes this kind of drilling from drilling in deep water is a combination of factors, including the cost of the well. So the well, instead of being a $100 million, may be as little as a million, or as much as $10 million. If you're looking at an offshore circumstance, development requires $50 to $60 dollars a barrel of oil, but (these operators') costs are very low -- $10 or $15 a barrel."

Morse was co-author of a report last month on the U.S. drive for energy independence , which predicted that the glut of domestic oil will lead the U.S. to move away from imports, a trend that could start with declining demand for West African crude as early as this summer.

He believes the shift could sharply reduce the price of oil, and therefore limit the revenues of the producing nations. Brent crude oil, the international benchmark, could trade in a new lower range of $70 to $90 per barrel by the end of the decade, down from its recent range of $90 to $120 per barrel, according to Morse.