Oil Extraction Ripe for Innovation : A Supply & Demand Market

It appears the naysayers are having a good day believing their prediction of the new technology, 'fracking' will not be able to sustain market price fluctuations. In some way they were right, but the best way they are wrong, as usual.

As the market demands more oil and at a price that the consumer believes is the right price, that is they are willing to pay, the free market will be there to meet the demand by developing new technologies for the extraction of resources at a profit. This is how it works in a free market.

In a market where the government is in control, there will be little or no innovation as the motivation to expand and develop will be in the hands of bureaucrats. Little wonder then why the progressive socialist liberal democrats that have sided with renewable energy sources, like wind, solar and biofuels like Ethanol, giving them huge subsides, are losing ground to the free market.

But in reality, the progressives never intended to for the renewable energy sources to be a reliable energy replacement for fossil energy, their attack on the fossil energy industry was political and ideological.

Mr Obama, and his progressive friends, believed if he could destroy the fossil energy industry he could limit the options that most citizens would have to prosper in a free society. He knows that the freedom to chose is death to his dream of a socialist America.

America's Shale Boom Not Over Despite Low Petroleum Prices
Source: Mark P. Mills, "Shale 2.0: Technology and the Coming Bid-Data Revolution in America's Shale Oil Fields," Manhattan Institute, May 16, 2015.

May 22, 2015

With petroleum prices down 50 percent over the past year, many analysts and pundits are predicting the end of America's shale oil boom. High prices, shale skeptics argue, created a bubble of activity in unsustainably expensive shale fields. As shale-related businesses contract, consolidate, and adjust to the new price regime, a major shale bust is inevitable, they add, with ghost towns littering idle fields from Texas to North Dakota.

It is true that 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.

John Shaw, chair of Harvard's Earth and Planetary Sciences Department, recently observed: "It's fair to say we're not at the end of this [shale] era, we're at the very beginning." The technology deployed in America's shale fields has advanced more rapidly than in any other segment of the energy industry. Shale 2.0 promises to ultimately yield break-even costs of $5-$20 per barrel — in the same range as Saudi Arabia's vaunted low-cost fields.

The transition to Shale 2.0 will take the following steps:

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