If there’s one defining characteristic of the American shale revolution, it’s innovation. While OPEC’s petrostates have been forced to sit idly by and endure low oil prices these past two years, U.S. frackers have tackled the bargain crude problem with relentless tenacity, constantly working to find new ways to extract more crude from shale formations for less money and in less time. The latest example of this comes to us courtesy of Chesapeake Energy, one of America’s biggest shale firms, which just found a way to massively increase production from its wells through the use of “monster fracking.” Bloomberg reports:
Chesapeake said Thursday at an analyst conference that it set a new record for fracking by pumping more than 25,000 tons of sand down one Louisiana natural gas well, a process the shale driller christened “propageddon.” The super-sized dose of sand — known as “proppant” — is able to prop open bigger and more numerous cracks in the rock for oil and gas to flow. Output from the well increased 70 percent over traditional fracking techniques, Jason Pigott, vice president of operations, said during a presentation.
“What we’re doing is unleashing hell on every gas molecule downhole,” Pigott said.
Shale drillers aren’t holding back in North American shale fields, where the average amount of sand used for each well has doubled since 2014, according to Evercore ISI. At the same time, the length that wells are drilled sideways underground has grown by 50 percent, and the number of zones for hydraulic fracking are also up by half. Each zone of the well isolated for each frack is also growing larger as service companies attempt to break down more of the oil-soaked rock into rubble and cram more sand into the crevices for the hydrocarbons to escape.
By dramatically increasing the amount of sand used in hydraulic fracturing operations, Chesapeake has proven its ability to squeeze a lot more hydrocarbons from a given shale well. That means it can focus more on its most productive well pads, which can help lower its costs, an especially important accomplishment in today’s relatively low-cost environment.
When the Saudis strong-armed OPEC into not cutting production during the recent collapse in crude prices, they were making a bet that American shale producers would be forced to sharply cut output of wells that were no longer profitable, thus solving the global glut by working with the market. But that didn’t happen—U.S. oil production didn’t fall off a cliff, it only dropped slightly as companies pioneered new techniques and methods for cutting costs even as crude prices dropped well below $50 per barrel.
Now, Riyadh and the rest of OPEC are finally willing to intervene, but if their plan to cut production is successful in sending prices back up, it will be American producers that will benefit the most. No matter which way you look at it, U.S. energy security is strong to its core these days, and it’s all thanks to the shale boom.