Story Credit, David Wethe at Bloomberg, as reported on Business Insider.com | Shale industry legend Harold Hamm is looking ahead to the next potential breakthrough in US crude oil production.
A turn toward new practices would come as site depletion becomes a growing worry for the sector while rising costs mean drillers need higher crude prices to profit.
“What we’ll need in the future is what I’ll say is Generation 3,” he said at a recent energy conference, according to Bloomberg. “That’s to deal with the tough rock that contains a lot of things that heretofore we weren’t able to produce, and also to get more out of the Generation 1 and 2 rock.”
Hamm made a name for himself by applying horizontal drilling techniques to unlock vast amounts of oil in North Dakota’s Bakken shale region. That tapped into what he refers to as Generation 2 rock.
Efforts to extract crude from Gen 3 rock would open up sites that have been largely passed over. Already, Hamm noted that work with Gen 3 material was ongoing in Oklahoma, a source of optimism for the Continental Resources chairman.
But more extensive development will require new technologies, and to maintain industry profitability amid elevated inflation, oil will have to trade at $75 to $85 per barrel, he added.
According to Bloomberg’s calculations, oil drillers need crude prices of $86 or more to make their costliest wells profitable, up 50% since March 2022.
For now, the booming shale supply has helped deliver record oil production in the US, which surged to a new high of 13.2 million barrels a day last month.
But worries are rising that the most prolific wells have already been tapped, and growth projections from top shale producers have moderated recently.
Meanwhile, the industry is expected to see a wave of consolidation after oil giant Exxon agreed to acquire Pioneer Natural Resources for $59.5 billion last month, in a bid to secure the shale company’s top drilling sites.
