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Technology bringing about new era in US shale production, sector experts say

A technological revolution is set to transform U.S. shale production as drillers find new and more efficient ways to boost their volumes, according to energy industry leaders and technology providers alike.

Unconventional oil and gas resources in the U.S. have transformed the worldwide industry over the past decade, and more change could be on the way as these areas draw the interest of big players with large research and development budgets. The rates of return remain a subject of close scrutiny, with only about 10% of shale oil currently produced through the combination of hydraulic fracturing and horizontal drilling.

There is a near-universal expectation that some improvement in the process will occur, but even veterans can only guess how the game will go. "The fundamentals of what's going on are yet to be elucidated ... The answer of how oil comes out and why it comes out remains a mystery," Halliburton Co. Vice President of Innovation Greg Powers said, but improving the technologies used in shale production will lead to much higher rates of return in the future.

From the technology providers' side, Amazon Web Services Inc. CEO Andrew Jassy said the combination of robotics and artificial intelligence is changing how humans work in the upstream oil and gas sector. According to Jassy, oil and gas companies are turning to the cloud to speed up their analysis and reduce costs. Machine learning, which involves using algorithms to study data and identify patterns, is helping companies better understand the vasts amount of data they ingest when exploring new production fields.

Jassy said the Internet of Things — which he called "computing on the edge" — could help producers make better, faster decisions when situations change at the drill bit. The combination of IoT and machine learning, he said, will "really be powerful" as it will allow for changes to be made with plenty of information at the company's disposal regardless of where the decision-makers are.

Energy Secretary Rick Perry also touted technology's role in energy security, adding that a "cascade of innovation" had boosted all sectors of the U.S. energy industry."Energy independence used to be a soundbite. Now it's a reality," he said March 13 at CERAWeek by IHS Markit. Perry said the U.S. was entering a "new American energy era," with new and smarter ways to produce energy with reduced emissions.

"We want other countries to benefit from the innovation, technology, that is unleashed by our energy abundance. What we offer is true energy choice, which is borne out of innovation and represented by a variety of supply," he said.

Among those incorporating technology into strategy is oil and gas supermajor Chevron Corp., with Chairman and CEO Mike Wirth highlighting the role that technology can have to drive efficiency and performance in shale drilling in the Permian Basin and elsewhere, "from shale to scale."

Schlumberger Ltd. and Rockwell Automation Inc.'s newly formed joint venture Sensia is leading the push to bring automation to the oil and gas industry, a deal that is part of a movement where big oil is joining forces with big tech to try to lower costs and boost productivity. Other notable collaborations include deals between Exxon Mobil Corp. and Microsoft Corp. and Royal Dutch Shell PLC and Amazon Web Services.

"The next level of efficiency and productivity in the oil and gas industry comes from automation," Schlumberger Executive Vice President of Technology Ashok Belani told attendees March 11 during CERAWeek by IHS Markit. "At the end of day it is all about productivity."