How Rebounding Oil Is Making U.S. Shale More Viable: QuickTake

Oil’s surge to its highest level in seven years, along with strong demand for natural gas, is driving renewed interest in fuel trapped in underground rocks known as shale. Fracking shale has made the U.S. the world’s biggest producer of oil and gas, giving America the energy independence its leaders have sought for decades and upending the geopolitics of the world energy trade. Recent oil busts, exacerbated by the pandemic, drove many producers to bankruptcy, but the rebound under way since early 2021 is transforming the economics of the shale industry once more.

For decades, U.S. oil companies sought a way to unlock vast amounts of oil and natural gas trapped in tight shale rock with little success until legendary Houston oilman George Mitchell combined two decades-old drilling technologies – hydraulic fracturing and horizontal drilling – to unleash the shale revolution in the early years of the century. By drilling horizontal “laterals” from vertical wells and injecting a mixture of water, sand and chemicals down the well under high pressure, Mitchell found the key to unlocking oil and gas from shale. The subsequent shale boom that began in 2005 transformed the U.S. into the world’s biggest producer of oil and natural gas. Before the global pandemic broke out in 2020, shale drilling represented about 60% to 70% of U.S. oil production, which hit a record 13 million barrels a day.