The United States, which was facing a gas shortage five years ago, now has such enormous supplies it is looking to export the fuel in large volumes for the first time.
The common wisdom in the industry was that the process Mitchell had invented for natural gas wouldn’t work for oil. Oil molecules are bigger and stickier than gas molecules, so petroleum engineers believed it would be impossible to get them to flow from source rock, even if the rock were cracked by fracking. But Mark Papa, the CEO of a small oil and gas company called EOG Resources, didn’t accept that.
‘‘The numbers were too intriguing, the prize was so big,’’ he remembered.
He thought there could be as much as a billion barrels of oil within reach in Texas, North Dakota and elsewhere — if only he could squeeze it out.
In 2003, he had a ‘‘eureka!’’ moment while poring over pictures of rock. Sections of a 40-foot-long column of source rock had been run through a CT scanner, the same type used to peer into the human body.
He saw something in the source rock sections the rest of the industry didn’t know was there: a network of passageways big enough for oil molecules to pass through. Papa believed the passageways could act like rural roads for the oil to travel through. Fracking could then create superhighways for the oil to gather and feed into a pipe and up to the surface.
EOG began drilling test wells, and in 2005, Papa got some results from one in North Dakota that made him realize oil could flow fast enough to pay off.
‘‘It was kind of like holy cow,’’ he says. ‘‘My first thought was we need to replicate this, make sure it’s not a freak result.’’
It wasn't. EOG snapped up land in a similar formation in South Texas known as the Eagle Ford Shale for $400 an acre when his competition thought it would never produce much oil. That land now goes for $30,000 per acre.
Papa thought the Eagle Ford might hold 500,000 barrels of oil. The Department of Energy now predicts it holds 3.4 billion. Some even expect 10 billion, which would make it the biggest oil field in U.S. history.
SMART DRILLS, RIGS THAT CAN WALK
But even after drillers figured out how to find oil and gas deep offshore and in onshore source rock, they still needed to develop technology that would make it economical.
At the tip of every oil or gas drill is a rotating mouth of sharp teeth that chews through rock. In the past, these drill bits could only dig straight down. Now they are agile enough to find and follow narrow horizontal seams of rock.
The drilling-services company Baker Hughes has designed a bit that can change directions underground, without having to be drawn back up to the surface, reducing drilling time by as much as 40 percent.
Behind the drill bit, attached to a long line of steel known as the ‘‘drill string,’’ is an array of sensors. The sensors bombard rock with subatomic particles and measure the gamma radiation that bounces back. They assess how easily electricity flows through the rock and underground fluids. They analyze the magnetism of the rock and how it vibrates — both up and down and side to side — while drilling.
‘‘To the layman, it looks like dumb iron, but you'd be shocked about what’s inside,’’ says Art Soucy, president of global products and services at Baker Hughes.
All this information is sent to engineers via fiber-optic cables. They run the information through supercomputers as powerful as 30,000 laptops to create a picture of the earth thousands of feet below the surface.
The people analyzing this data — and even directing the drill bits — are often sitting hundreds of miles away. Shell’s Pennsylvania drilling operations are directed from a center in Houston, where experienced drillers monitor the progress at several sites across the country from a single room.
And when the drilling is done, the rig itself can ‘‘walk’’ a hundred feet or so to another location and start drilling again. In the past, rigs had to be taken down and reassembled, which could take days. New rigs are built on sliding ‘‘shoes’’ that allow hydraulic lifts to shuffle the rig forward in short steps.
‘‘It has made possible things that were unthinkable 10 years ago,’’ says Claudi Santiago, managing director at First Reserve Corp., a private-equity firm that invests in energy companies.
Now, drillers are finding oil faster than the world is using it. At the end of 2001, the industry had enough ‘‘proved oil reserves’’ to satisfy world demand for 45 years, according to BP’s annual statistical review, a closely watched study. By the end of 2011 that had grown to 51 years — even though a decade’s worth of oil had been used and daily demand had grown 14 percent. And ‘‘proved reserves’’ refers to oil that can be economically tapped using today’s technology. Tomorrow’s methods could yield even more.Continued...