Technological Advancements in the Shale Oil Industry

Manufacturing Industry – Technological Advancements in the Shale Oil Industry

Over the past 3 years, American shale oil companies have been in an industrial war with OPEC, which has refused to decrease its oil production despite plummeting oil prices. The strategy behind OPEC’s dogged resistance to American competition was to destroy the competition by flooding the world’s market with oil. Their strategy backfired remarkably, due in large part to the ingenuity and perseverance of the American shale oil industry. According to CNBC, the cost to produce shale oil in the mid-west has decreased by approximately 50% since 2014. In this post, we will highlight three specific improvements in drilling techniques and technology that have helped decrease production costs.

  1. Pad drilling is one of the techniques that is increasing the efficiency and decreasing the cost of shale oil drilling. The idea behind pad drilling is simple: instead of drilling one well in a specific location and then relocating to another site after extracting the shale oil, a drilling pad is constructed which allows multiple wells to be drilled from the same site.
  2. Rotary steerable systems (RSS) is one of the directional deviation improvements that have allowed for more accurate and better controlled steering of drills. One of the marked advantages to using RSS is the ability to change the direction of the drill, while maintaining the rotation of the drill bit. This allows for an improved penetration rate that helps to maximize well output.
  3. Hydraulic fracturing is another shale oil drilling technological advancement that results in an increase in shale oil production. The key behind hydraulic fracturing is sequential horizontal drilling along the shale formation. This allows for a significant increase in productivity for new shale oil wells.

The American shale oil industry has survived the oil price war with OPEC because of its push to increase efficiency and lower the break-even point. As a result, the shale oil companies that have survived are now poised to capitalize on OPEC’s recent capitulation, which promises to usher in a new age of American energy independence and economic opportunity.