US Shale Working Smarter and Harder

The popular adage contends that you can either work smarter or harder, but the American shale industry is busy doing both to stay competitive in today’s market. Hydraulic fracturing and horizontal well drilling may have set of the shale boom, but a host of different technological advances and innovations—from big data analysis to microbial identification—are keeping this renaissance going. Bloomberg reports:

[Energy companies are] using DNA sequencing to track crude molecules and mapping buried streams with imaging software. Robots are fitting pipes together. Roughnecks consult mobile apps for drilling-direction advice. Oilfield services providers find themselves in a new arms race, led by giant Schlumberger Ltd., which recently opened an office on Sand Hill Road in the heart of Silicon Valley. […]

[Several] companies, including Norway’s Statoil ASA and Houston-based Anadarko Petroleum Corp., have hired Biota Technology to help them identify the most bankable parcels [of oil fields]. By comparing microbes in rock samples to those from oil produced in the area, Biota can map out choice draining spots and, according to founder Ajay Kshatriya, boost a well’s output by millions of dollars. […]

EOG Resources Inc., an Enron Corp. castoff that is now the second largest independent U.S. oil explorer, has embraced big data analysis to such a degree that Wolfe Research analyst Paul Sankey called it “the best oil company we have ever covered.” The Houston-based company has, among other things, invented proprietary iPhone apps that field crews use to calculate how hard to frack particular stretches of crude-soaked rocks.

Meanwhile, OPEC and its ilk are worried about how much they’re capable of cutting production to prop prices up—a belated attempt to stop the bleeding caused by the price collapse over the past two and a half years. U.S. shale is going up against a cabal of producers and, thus far, it’s the American suppliers that are winning. U.S. production is up nearly 800,000 barrels per day since October, buoyed by the recent oil price rebound and, as you can see above, by a bevy of new operational advances.

In this battle between upstart producers and the old guard, one group has gone the route of relentless innovation, while the other has reluctantly pursued a strategy of weak market intervention to maintain yesterday’s status quo. And that really tells you all you need to know about the state of American energy security in the world today.