The shale revolution transformed the US oil and gas industry operationally and functionally in the late 2000s and early 2010s, but the most significant changes occurred years later. During the middle and latter part of the last decade, E&Ps continued to improve their drilling and completion techniques and significantly increased production as they gained experience. This production growth was enabled, or driven, depending on the perspective, by aggressive efforts by midstream companies to build the pipelines, gas processing plants and other infrastructure needed to handle higher production and export volumes. More recently, capital market constraints, the Covid pandemic and a looming ESG narrative have propelled the industry into the next phase of its evolution, highlighted by fiscal discipline, delivering better returns for shareholders through managed capital expenditure. But how long will this stage last, and what happens? In today’s RBN blog, we examine the maturing of the energy industry and the differences between this transformation and those of other industries.
A long decline in U.S. oil and gas production was slowed and reversed about 15 years ago by the expanded—and increasingly successful—use of hydraulic fracturing, which opened up shale source rock to facilitate the release of trapped hydrocarbons (cf First place, part 4). “Fracking” was not new. Its roots go back to 1865. But George Mitchell, the founder of Mitchell Energy & Development Corp. and patriarch of modern fracking, breathed new life into the industry by using hydraulic fracturing in the Barnett Shale, initially focusing on natural gas production. Later, the technique was also used to stimulate crude oil production.
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