The Shale Revolution Has Only Just Begun

  • Date: 29/01/16
  • Next Big Future

We’re not at the end of the shale revolution, we’re at the very beginning.

The Oil-price collapse was caused by the astonishing, unexpected growth in U.S. shale output, responsible for three-fourths of new global oil supply since 2008. And as lower prices roil operators and investors, the shale skeptics’ case may seem vindicated. But their history is false: the shale revolution, “Shale 1.0,” was sparked not by high prices—it began when prices were at today’s low levels—but by the invention of new technologies. Now, the skeptics’ forecasts are likely to be as flawed as their history.

The information here is from a paper called “Shale 2.0: Technology and the Coming Big-Data Revolution in America’s Shale Oil Fields” was released in May by Mark P. Mills, senior fellow for the Manhattan Institute and faculty fellow at Northwestern’s McCormick School of Engineering and Applied Sciences

Technological progress, particularly in big-data analytics, has the U.S. shale industry poised for another, longer boom, a “Shale 2.0.”

We’re not at the end of this shale era, we’re at the very beginning.

The shale industry is unlike any other conventional hydrocarbon or alternative energy sector, in that it shares a growth trajectory far more similar to that of Silicon Valley’s tech firms. In less than a decade, U.S. shale oil revenues have soared, from nearly zero to more than $70 billion annually (even after accounting for the recent price plunge). Such growth is 600 percent greater than that experienced by America’s heavily subsidized solar industry over the same period

The transition to Shale 2.0 will take the following steps:

1. Oil from Shale 1.0 will be sold from the oversupply currently filling up storage tanks.
2. More oil will be unleashed from the surplus of shale wells already drilled but not in production.
3. Companies will “high-grade” shale assets, replacing older techniques with the newest, most productive technologies
in the richest parts of the fields.
4. As the shale industry begins to embrace big-data analytics, Shale 2.0 begins.

Shale companies now produce more oil with two rigs than they did just a few years ago with three rigs, sometimes even spending less overall

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