As shale producers tried more aggressive completion designs, they were able to figure out which designs offered the most oil production per unit of input cost.  Over time, these companies learned better and better well designs, and in the process increased oil production per well by about 90% from 2005 to 2015. Even as oil prices collapsed, wells fracked in 2015 were still about 16% more productive than those in 2014.  Importantly, I computed these productivity gains so that they are already net of the other “easy” gains oil companies in North Dakota realized by drilling longer wells in the most productive locations.  Thus, the data shows that the recent collapse in oil prices has not prevented oil companies from continuing their learning process.

While cost reductions and unique engineering characteristics are important reasons for shale’s resiliency during a historic time in our energy landscape, learning and innovation provides the most hope for the industry’s future. As today’s shale producers continue to learn the most efficient ways of developing new wells, tomorrow’s producers in shale basins around the world will probably follow their lead.  In doing so, the emergence of a nimble and innovating global shale industry will continue to frustrate conventional oil producers eager to return to tightly controlled production and higher prices.

By Thomas Covert, Contributor

Want to learn more? I talked about this topic in EPIC’s Off the Charts podcast series. Listen here.

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