Technology

Quick Facts

  • McKinsey Global Institute has called advanced oil and natural gas exploration and recovery one of the twelve potential disruptive technologies that could transform the globe. It estimates unconventional oil and natural gas could unlock $4 trillion in economic value worldwide.
  • The cost per foot among shale wells has declined over 43% since 2009 as companies innovate and increase efficiency.
  • Unconventional gas discoveries have increased total potential natural gas resources by 113% since 2004.

Industry’s Technological Innovation Is Driving America’s Energy Renaissance

The oil and natural gas industry’s technological innovation is driving America’s energy renaissance. Independent oil and natural gas companies employ thousands of scientists and engineers who have developed new technologies that enable us to reach even more oil and natural gas formations and achieve higher yields. The most well-known are horizontal and directional drilling in combination with hydraulic fracturing, which have made previously uneconomic reserves of oil and natural gas available. These technologies have unleashed a huge new supply.

Many other technologies make oil and natural gas development and production safer and more environmentally friendly. Oil field service companies are developing hydraulic fracturing fluids made solely from food-grade products, and they are developing ways to use brackish and other previously unusable water in the fracturing process. Natural gas rigs reduce air emissions significantly compared to conventional diesel rigs. Companies use green completions to capture air emissions during the hydraulic fracturing and flowback processes. These and many other new technologies will help us increase our production while decreasing the environmental impact of oil and natural gas development and production.

Unconventional oil and natural gas discoveries made possible by industry’s technological innovation have increased reserves and production. The Colorado School of Mines Potential Gas Committee estimates U.S. natural gas potential resources at 2,384 Tcf, an increase of 27% since 2005, and annual natural gas production has risen by over 6.7 trillion cubic feet (Tcf), 26%, since 2005. The U.S. produced over 3.1 billion barrels of oil in 2014, the highest since 1989, and U.S. crude oil reserves are at the highest level since 1988.

Unconventional Resources

While much of the national discussion focuses on shale formations, they are not the only driver of the recent surge in energy supply. Almost all the reserves in the West are unconventional, from shale oils like the Bakken, Niobrara and Mancos, to tight sands in the Green River and Uinta-Piceance basins, to the coalbed methane (CBM) resources in the Raton Basin.

Located in the Williston Basin, the Bakken formation covers 200,000 square miles in parts of Montana, North Dakota, and Saskatchewan. In 2008, USGS estimated it contains 3 - 4.3 billion barrels of technically recoverable oil. Previously considered uneconomical to develop, advancements in geoscience, horizontal drilling, and hydraulic fracturing have unlocked the Bakken, Three Forks, and other shales such as the Niobrara in Colorado and Wyoming. Bakken crude production surged from 274,000 barrels per day in January 2011 to 1,142,000 in May 2015. Analysts predict that 33,000 wells will be drilled in the Bakken over the next 20 years. The largest challenge for the Bakken continues to be a lack of export infrastructure to move the oil to needed markets. With the unknown fate of the Keystone pipeline, which includes an onramp for Bakken crude, industry has significantly utilized rail to ship oil to West and East Coast markets (see Rail Transport).

The Niobrara in the Denver-Julesburg Basin is a shale rock formation covering parts of Colorado, Kansas, Nebraska, and Wyoming. Much like the Bakken, the Niobrara holds vast energy and economic promise. Oil production in the Denver-Julesburg (DJ) Basin more than doubled from 29 million barrels in 2008 to over 73 million barrels in 2014, thanks mainly to the Niobrara.