Since the early 1970s, OPEC has had a powerful influence on the price of oil by virtue of its enormous oil production. However, that has changed over the last five years when high oil prices stimulated the U.S. fracking industry. Its huge shale oil output combined with Saudi Arabia’s oversupply efforts to suppress U.S. fracking has since led to a collapse in the price of oil. Because fracking is more costly than conventional oil extraction, the current oil price collapse is closing down U.S. shale oil rigs. Experts predict that fracking will only “kick in” when oil prices are high enough to make it viable and therefore it will only serve to place an upper limit on the price of oil. As long as OPEC maintains a production rate that keeps prices below this fracking threshold, the shale oil industry will remain dormant. However, this thinking is flawed because it assumes a stagnant fracking technology that has been anything but stagnant. According to Mark Mills of the Manhattan Institute:

“In recent years, the technology deployed in America’s shale fields has advanced more rapidly than in any other segment of the energy industry.” “The shale industry is unlike any other conventional hydrocarbon or alternative energy sector, in that it shares a growth trajectory far more similar to that of silicon valley’s tech firms.”

Furthermore, he predicts a technological revolution in America’s shale oil production that will drive down the break-even cost of shale oil extraction to $5–$20 per barrel of oil which is the same as Saudi Arabia’s low-cost oil fields. What’s the reason for his prediction? Big data analytics. Fracking has done more than produce a lot of oil in the past five years. It has also produced hundreds of petabytes of data in the form of images, seismic recordings, videos, sound recordings, and field notes. The data is vast in its volume and variety and remains largely untapped, but the insights contained within will drive a new revolution in fracking which Mark Mills calls shale 2.0. If the sceptic in you finds this somewhat far-fetched, consider what an oil industry insider is quoted as saying:

“Six or eight years ago we were estimating a recovery factor of just 3.5% in the Bakken shale reservoirs from our horizontal wells. With additional work, micro-seismic study, well production history, big data analytics, etc., we’re now estimating that we’re recovering 15-18% of the oil in place.”

That’s an increase by a factor of 4 to 5. For more information about big data and its storage, please contact us.