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In an article from Oil and Gas Journal’s April edition entitled, ‘Permian production pushes U.S. crude output to 15-year high,’ the author discusses the huge increases in production from September 2011 to September 2012, ” Texas production increased by more than 500,000 b/d, largely due to the rise in drilling in the Eagle Ford Shale in South Texas and the Permian Basin in West Texas.”

Increased production has brought some interesting implications for the takeaway capacity of pipelines, in addition to a huge economic impact for Texas. For these booming areas, unemployment is as low as 3%. But what is really responsible for this huge increase in production?

According to another article in the journal, ‘Technology, the engine driving Permian growth,’ “there is no way to understate the importance of horizontal drilling and hydraulic fracturing.” As the author goes on to share, ” In a relatively short period of time, operators have become so adept at hydraulic fracturing, that the process of completing a shale or tight-rock well has become repeatable to the point that it mimics an assembly line-like process in a factory.”

But while production has gone up, as we all know, gas prices have been historically low. So the challenge for producers is to get “to a point where they are looking to optimize their assets, by focusing on liquids-rich shale plays.”

Even as the focus shifts to finding more liquids, producers must find a way to surface gas assets in “such a way as to make them profitable, even at a price point of $4/MMBTU – a price that some analysts say is reasonable to expect over the next decade.”

The answer to this economic problem is oil and gas software and technology to help producers make smarter choices and drill less. As the article clearly states, “Optimization will come from technology in particular technological investments that will help them drill fewer gas wells, [and] more selectively fracture.”

For more on the gap between oil and gas software and new technology in the energy industry, check out this post…


Nate Richards
Nate has over 18 years of software engineering and consulting experience. He founded Entrance in 2003. Nate is the past President of the Board of LifeHouse Houston, a Christ-centered maternity home ministry, and is past Executive committee member and Treasurer of Houston Achievement Place, a foster care and social skills training non-profit organization.
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