Guest column: Riding the shale revolution

Improved use of information technology has led to the natural gas boom that has turned the U.S. economy around, writes C. Kent Chamberlain.

The main factor in the recent oil-and-gas boom is the innovative use of information technology that has put the United States ahead of other countries in energy production.

Hydrocarbons, especially gas, were recognized in porous, limited permeable rocks like shale for a long time. Geologists, engineers and others began to recognize the potential of these kinds of rocks by applying “big data” systems developed in California’s Silicon Valley.

Drillers working in shale fields like the Marcellus Shale in the Appalachians, the Bakken in North Dakota and the Niobrara in Colorado have boosted the productivity of the typical oil and gas rig between 200 percent and 300 percent in only a few years.

Although a combination of hydraulic fracturing and horizontal drilling has gotten most of the credit for the oil-and-gas boom, fracking is not new. The first well was fractured back in 1947, and since then more than one million wells have been fractured in the U.S. alone.

The shale revolution of the past several years emerged from smart drilling. Today, thanks to three-dimensional seismic imaging - which lets crews know where to drill with the aid of down-hole sensors - U.S. drilling success rates exceed 85 percent.

Improved drilling efficiency is driving down the average cost to find and recover a new barrel of oil. Energy analyst Mark P. Mills reports that globally cost has jumped from $6 a barrel in 1998 to $27 a barrel today. But in America’s oil fields, it’s dropped as low as $7 a barrel. This explains why $150 billion of foreign direct investment has flowed into U.S. shale-oil production and billions more is being invested in shale gas and in manufacturing facilities that rely on an abundance of cheap gas.

According to the Energy Information Administration (EIA), largely because of increased production of shale oil, U.S. oil production is on track to increase 46 percent over the three years from 2011 to 2014.

In one shale-gas play in the Marcellus in the Northeast, natural gas production went from zero to 10 billion cubic feet in less than three years. Since 2011, the resource base of natural gas in the United States has more than doubled, allowing the nation to cut its energy bills by reducing dependence on imported oil, shift from coal to gas in electricity production, and cut carbon emissions to levels not seen since the 1990s.

Simply put, the shale revolution has turned the U.S. economy around. The extraordinary changes in energy production brought on by continuing innovation - especially in information technology - are certain to continue.

Let’s hope our policymakers in Washington learn from them, for the sake of economic growth, jobs and government revenue.