May 28, 2015
community’s glee is almost palpable.
price of a barrel of West Texas Intermediate began to
plummet a year ago -- when it topped $100 -- and has been stagnant since
December. Roughnecks are being laid off. The
rig count is down. There’s talk of a
recession in Texas. BNSF Railway, a major carrier of petroleum from North
Dakota’s Bakken formation, is imposing
surface, greens have a cause to crow. Half of all domestic
petroleum is now derived from fracking, the combination of horizontal
drilling and hydraulic fracturing that taps “tight” reservoirs. Shale is
costlier to access than traditional plays. When the buyers and sellers on the
international market dampen the value of black gold, fracking often becomes
unprofitable. So some on the eco-left are smugly arguing that the shale boom is
about to go the way of the dot-com bust.
Energy analyst Mark P.
Mills has an important message for the moonbats: Not so fast.
Technology and the Coming Big-Data Revolution in America’s Shale Oil Fields,”
published by the Manhattan Institute, examines where shale technologies going,
and whether “more oil [can] be unlocked at lower costs and with fewer rigs.”
starts with a few facts about an oft-cited metric: “[T]he impact of rising
shale-rig productivity was visible before the current, widely publicized drop
in rig count. A sixfold rise in shale oil rigs, beginning in 2006, yielded only
modest output growth. Then, starting in about 2012, the growth in rigs slowed
and nearly stopped, but output soared. Also noteworthy is the fact that when,
in 2006, entrepreneurs first began profitably deploying then-nascent shale
technologies, oil sold for less than $50 per barrel; when production first took
off, the price was still below $60 per barrel.”
an overview of Frackland. “Although America’s shale industry is new,” Mills
writes, “its scale is such that it is now a permanent fixture of the U.S.
techno-industrial base. The U.S. shale ecosystem has exploded -- from essentially
nonexistent, just over a decade ago -- to a $300 billion component of GDP,
featuring thousands of companies. The U.S. shale ecosystem is also a distinctly
different industry, in structure, operation, and technique, compared with its
cousin, the conventional hydrocarbon industry.”
such a solid foundation, oil from shale is seizing the advantages technology
provides. The “three key measures of drilling -- time to drill, wells per rig,
and total distance drilled -- have improved by 50-150 percent in less than five
years.” A “walking rig” allows multiple wells to be placed on the same pad.
Higher pressures and more powerful chemicals add to capacity improvements, as
do stronger motors and better pipe-perforation.
future? More and more. “Incremental and dramatic improvements,” Mills adds,
“will continue in all aspects of the many technologies used in shale
production: logistics, planning, seismic imaging, well-spacing fluid and sand
handling, chemistry, drilling speed, pumping efficiency, instrumentation,
sensors, and high-power lasers. Shale fields will increasingly be developed
using advanced automation, mobile computing, robotics, and industrial drones.
At present, barely 10 percent of projects use fully automated drilling and pressure-control
systems, for example.”
predicts that Shale 2.0 will benefit most from “big-data analytics.”
Mega-crunching mountains of 1s
and 0s “offers nearly all industries the potential for unprecedented
insight, efficiency, and economic value.” Fracking is no exception. “Big-data
analytics can already optimize the subsurface mapping of the best drilling
locations; indicate how and where to steer the drill bit; … and ensure precise
truck and rail operations. Mobile computing, using app-centric analytics, can
increase uptime, reduce maintenance, improve workforce productivity, reduce
errors and rework, and enable low-cost compliance.” Stimulation practices
present the brightest opportunity. Horizontal wells are currently stimulated in
“24-36 stages, with, on average, only one-fourth to one-third of those stages
productive.” Mills believes that using data “on the complexities of shale
geology, geophysics, stimulation, and operations to optimize the production
process would potentially double the number of effective stages -- thereby
doubling output per well and cutting the cost of oil in half.”
the most amusing oversights of the
politically correct energy “industry” is its adamantine faith that
technological advances will soon make wind, solar, biomass, and hydrogen
affordable for businesses and consumers. Well, two can play at that game.
“Shale 2.0” supplies compelling arguments that when it comes to creating wealth
and dispensing cheap energy, fracking has only just begun. Sorry, greens, but
it looks like you’ll have shale oil to kick
around for a long, long time.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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