Never bet against America’s oil and natural gas engineers. About two decades ago, these engineers delivered the shale oil and natural gas revolution.
After many years of trying to figure out how to extract the oil and natural gas trapped in shale rock formations, America’s petroleum engineers developed horizontal drilling and hydraulic fracturing, commonly called fracking. Water laced with sand was injected into the shale deposits. This technology unlocked billions of barrels of crude oil previously trapped deep underground in the shale oil deposits of America’s Permian Basin, located in Western Texas and Eastern New Mexico.
With fracking, oil companies were able to crack shale rock apart. They accessed tiny deposits of oil. Using this technology, America’s oil companies increased domestic oil production from about 6 million barrels a day in 2006, to over 22 million barrels of daily production today. With fracking technology, the U.S. is the world’s leading producer of oil. Using similar technology, the U.S. is now a major producer and exporter of natural gas. Fracking transformed the U.S. from being a large importer of oil to a major exporter of oil. It thus also ended American dependence on oil imported from the Middle East. The U.S. can no longer be threatened with oil embargoes from countries located in that unstable region. The OPEC oil embargo of 50 years ago, which almost brought the U.S. economy to its knees, is today just a bad dream.
Now, another technological development is changing the outlook for global oil production and prices. Exxon Mobil, America’s largest oil company, currently produces about 5 million barrels a day of oil. To dramatically increase recovery rates from America’s shale oil fields, Exxon Mobil is introducing petroleum coke technology, sometimes called “Prop.” Petroleum coke is a byproduct of petroleum refining. Through chemical engineering, petroleum coke is transformed into a synthetic sand.
It is more expensive than ordinary sand, but it is perhaps 50% less dense and can be injected into oil wells to access significantly more of the tiny pools of oil locked in the shale rock of America’s West. Exxon Mobil says it can increase shale oil production by perhaps 20% to 30% from many of its wells across the Permian Basin. This innovation is potentially worth billions of dollars in additional profit.
Many said that shale oil production would slowly decline. These naysayers predicted that the U.S. would only be able to extract about 10% of the Permian Basin’s shale oil. The U.S. Energy Information Agency says that the U.S. Permian Basin holds potentially recoverable oil reserves that would last another 200 years at today’s consumption rates. Petroleum coke technology offers a path to oil abundance for the U.S. economy for many more decades. America’s chemical companies, which depend on relatively inexpensive refined products as well as America’s vehicle drivers, can sleep comfortably knowing that oil and gasoline prices should remain low and stable for many years to come.
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In addition, the petroleum coke technology enhances the national security of America. Each additional barrel of oil that the U.S. produces helps keep a lid on global oil prices. Lower global oil prices put pressure on America’s enemies, who are reliant on foreign exchange derived from oil exports. Prop technology harms Russia and Iran.
Exxon Mobil is not the only company introducing new technology into the shale oil fields. Chevron is experimenting with what it calls a soap technology, which also promises to increase dramatically oil production from the millions of acres where Chevron holds reserves. The future is very bright for the U.S. oil industry. Never bet against technological innovation by America’s greatest companies.
James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He publishes a daily Substack on financial markets, politics, and society. He can be followed on X and reached at [email protected].
