Two years ago, the shale oil industry was knocked down. The house of Saud cooked up a scheme to put the U.S. shale oil industry out of business. Instead of limiting production, the Saudi’s decided to make a play for market share. Oil prices plunged as a result, reaching lows not seen since the height of the financial crisis.
Some U.S. firms went bust, others slashed expenses, and many were forced to scale back their investment plans. But two years later, the U.S. shale oil industry is getting back up. Firms have adjusted to the lower price of oil by cutting costs and getting more productive. Oil services companies like Halliburton are leading the charge.
As the Wall Street Journal reports,
In May, Halliburton Co. helped tap the longest shale well on record—8,500 feet deep and another 18,544 feet long—for Eclipse Resources Corp. in Ohio, 130 miles south of Cleveland.
That well was fracked—the process of injecting water, chemicals and sand to coax out oil and gas—an extraordinary 124 times. Typical shale wells are fracked between 30 and 40 times, up from just nine fracks in 2011 at the start of the oil boom, according to Drillinginfo, a data provider for the energy industry.
To put that engineering feat in Manhattan perspective, that is equivalent to burrowing down to the depth of nearly five World Trade Centers at One World Trade Center, turning 90 degrees and drilling underground 3.5 miles to Grand Central station. Eclipse saved 30% by supersizing the well, said Chief Operating Officer Tom Liberatore.
It would seem the Saudi’s underestimated the power of American ingenuity and grit.
Jeremy Jones, CFA
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