Published: July 31, 2017 |

Robert W. Chase.
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Why should U.S. consumers feel good about the shale revolution? The best reason is that U.S. gasoline prices, adjusted for inflation, are the cheapest they’ve been since 2000. The price drop shows that one of the great benefits from the shale-oil boom is not going away.

Beginning around 15 years ago, oil companies began to unlock massive new supplies of oil from shale formations, thanks to a combination of two new technologies: horizontal drilling and hydraulic fracturing (or fracking). Companies have developed techniques for initially drilling vertical shafts and then re-orienting their drill bits to drill horizontally into a shale formation as far as three miles. After running pipe in the horizontal boreholes and cementing it in place, the pipe is perforated and then fractured all along the horizontal with a mixture of water, sand and additives to create vertical cracks in the rock to allow the oil trapped in the shale to flow.

These technologies opened up oil production in the Utica and Marcellus shales as well as other shale formations around the country, while driving down costs and undercutting the ability of OPEC and Russia to influence global oil prices. The benefits are reaching consumers around the world. The 92 million barrels of crude oil that the world economy consumes every day cost about $2 trillion less annually than it did a decade ago. In the United States, lower prices saved the average household about $700 a year last year.

But are bigger cuts in energy prices possible? There are several obvious ways to achieve further reductions and put money directly into the pockets of American consumers — either hold down the demand for oil, or increase the use of new innovative technologies. The former is not acceptable. Thus, the answer has to lie in technology.

Oil companies, for example, are increasingly using the power of massive amounts of data, making it easier for them to find oil and natural gas and to manage production. Some companies have reduced the time needed to drill new shale wells by half using data collected from sensors attached to downhole drilling equipment.

Oil producers are using so-called “super-spec” rigs that cut the time needed to drill a horizontal well to under ten days. By using more efficient rigs and data, companies can evaluate more options and are seeing production from oil fields rise by as much as five percent. Couple that with a 30 percent reduction in the investment required to drill holes and begin production and you can see the benefit of this technology.

Offshore oil and gas production is also changing due to automation. Jobs traditionally done by roustabouts are now being taken over by automated drilling systems operated from office buildings hundreds of miles away. A handful of high-tech data scientists sitting at computers are now performing tasks that once required ten times as many rig workers. In addition, robotics are now being used to perform dangerous tasks, such as connecting pipes during offshore drilling operations and inspecting underwater equipment on the ocean floor.

Yet, whatever the breakthroughs, the actual impact on energy production will depend in part on energy policy changes. The Bureau of Land Management needs to hold more lease sales and reduce the approval time for oil and gas drilling permits. Under the Obama Administration it took 257 days on average for a company to receive a permit to drill on public lands, an unnecessarily long time. The new administration wants to establish a 30-day time limit.

And, with President Trump’s recent call for more aggressive leasing of offshore tracts, including frontier areas in the Atlantic and Pacific, oil and gas drilling can potentially begin sooner. We could see the start of seismic testing in parts of the outer continental shelf that are believed to hold billions of barrels of oil and substantial amounts of natural gas.

For now, it’s hard to overstate the degree to which oil and gas production has been transformed in recent years. The dizzying pace of change is helping to make America’s energy more secure and affordable.

Robert W. Chase, P.E., is an Emeritus Professor of Marietta College, Department of Petroleum Engineering and Geology, 215 Fifth St., Marietta.

-  By:  Robert Chase, Mariertta Times