Two very different but surprisingly complementary technologies are coming together in a big way here in America, and our energy future is looking a lot brighter as a result. The shale boom has flooded the U.S. with new sources of oil and gas, unlocked from previously inaccessible shale bedrock. Now, firms are figuring out that to survive in today’s cutthroat oil market, with OPEC weathering low prices and increasing its own output to compete for market share, they’ll have to frack smarter, not harder. MIT’s Technology Review reports:
[S]ome observers expect a second wave of technological innovation in shale oil production that will equal or surpass the first one, which was based on horizontal drilling and hydraulic fracturing, or fracking. Fueled by rapid advances in data analytics—aka big data—this new wave promises to usher in a second American oil renaissance: “Shale 2.0,” according to a May 2015 report by Mark Mills, a senior fellow at the Manhattan Institute, a free-market think tank. […]
Drilling thousands of wells since the shale revolution began in 2006 has enabled producers—many of them relatively small and nimble—to apply lessons learned at a much higher rate than their counterparts in the conventional oil industry.
This “high iteration learning,” as Judson Jacobs, senior director for upstream analysis at energy research firm IHS, describes it, includes a shift to “walking rigs,” which can move from one location to another on a drilling pad, allowing for the simultaneous exploitation of multiple holes. Advances in drill bits, the blend of water, sand, and chemicals used to frack shale formations, and remote, real-time control of drilling and production equipment are all contributing to efficiency gains.
Intelligent curation of large data pools has been a hallmark of the information economy. While marketers trip over one another to add “smart” prefixes to every product description they can get their hands on, increased computing power is allowing industries to take a harder look at data sets that previously have been too big to easily or cost-effectively sift through.
It’s no surprise then that the shale industry, itself born out of the innovative deployment of dual technologies, is taking a similar approach to operations and using data analytics to excise inefficient plays and processes, allowing firms to focus on the real moneymakers while girding America’s energy future against the price pressures of an oversupplied marketplace.
By choosing not to cut its own production, OPEC has essentially placed a bet against America’s ability to survive in a bearish market—after all, shale plays are vastly more expensive to operate than are the conventional fields plumbed by the cartel’s members. This Saudi-led strategy amounts to a high-stakes game of chicken with fracking, but it doesn’t seem to have accounted for a very important fact: innovative new drilling techniques and the application of data analytics are giving U.S. companies a new advantage.