Full Title: Shale 2.0 Technology and the Coming Big-Data Revolution in America’s Shale Oil Fields
Author(s): Mark P. Mills
Publisher(s): The Manhattan Institute
Publication Date: May 1, 2015
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Description (excerpt):
With petroleum prices down 50 percent over the past year, many analysts and pundits are predicting the end of America’s shale oil boom. Recent headlines include: “Oil Price Fall Forces North Dakota to Consider Austerity” (New York Times);1 “Oil Price Drop Hurts Spending on Business Investments” (Wall Street Journal);2 “The American Oil Boom Won’t Last Long at $65 per Barrel” (Bloomberg Business);3 and “The Shale Oil Revolution Is in Danger” (Fortune).4 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. Now, the skeptics’ forecasts are likely to be as flawed as their history. This paper explains how continued technological progress, particularly in big-data analytics, has the U.S. shale industry poised for another, longer boom, a “Shale 2.0.”