Solving Trump’s Oil Problem

Trump may have a little problem on his hands in 2025.

We all know President Trump’s mantra when it comes to American energy — drill, baby, drill! It’s a great sentiment, makes for a good headline, and anyone would be a fool not to embrace that philosophy. 

It’s a win-win situation for everyone, right?

Well, it turns out there may be a slight hitch to this feel-good story for the U.S. oil sector. President Trump’s New Year’s resolution to turn the U.S. into an even bigger dominant force in the world’s energy dynamic may not be as easy as you might think. 

You see, it all comes down to one simple thing — U.S. oil production is in a much different place than the last time Trump was in office. Understanding those fundamental differences in how we’re extracting our crude today makes all the difference when you approach tomorrow’s U.S. energy security. 

Fortunately, there is a path forward.

Ever since Colonel Drake drilled the first U.S. oil well 166 years ago near Titusville, PA, there have been a steady flow of innovations that have continually changed the game for oil companies. 

These new technologies take time to develop, too. 

If you ask most people when we first started fracking wells, I’d bet most of those answers will be somewhere around 2008. After all, that’s when the tight oil boom reversed our decades-long production decline as U.S. oil output started soaring higher. 

A few might even go back to the 1980s, when George Mitchell started experimenting with horizontal drilling and hydraulic fracturing in the Barnett Shale, perfecting the technique to extract oil and gas from the tight shale rock. 

Fewer still realize that we’ve been fracking oil wells since the 1940s, when Stanolind Oil was testing out its new “hydrafrack” method.

Like I mentioned before, there’s a bit of a problem when it comes to the “drill, baby, drill” philosophy. You see, the shale boom that started in 2008 has entered a new stage. 

During the early years of the shale boom, companies whipped themselves up into a drilling frenzy, digging as many holes as they could and taking on far more debt than they could handle.

Just consider that during the fourth quarter of 2011, there were over 2,000 rigs deployed in U.S. oil fields. Over the next few years, the rig count remained high until prices crashed in 2015. 

It took two years for output to recover to pre-crash levels. At the time, we were pumping out more than 9 million barrels per day. 

However, something changed as the years went on. The number of rigs that were actively drilling for oil and gas in the U.S. never came close to the number that were active in those early years; by October of 2018, there were 1067 rigs in the field — roughly half of the number deployed in 2011.  

And yet, U.S. field production from crude oil averaged nearly 11 million barrels per day in 2018. 

The reason why isn’t a mystery. 

Drillers were becoming more and more efficient and drilling and extracting oil and gas resources from the tight shale formations underground. 

Today, output has climbed to around 13.2 million barrels per day, and yet the latest Baker Hughes rig count only has 584 rigs out in U.S. fields. In the Permian Basin, where more than 6.1 million barrels of oil are extracted daily, companies have been doing more with less:

In order to achieve this feat of pumping more oil out of the ground while spending less and using fewer rigs to do it, it all comes down to new innovations. 

Think about it… companies nowadays utilize multi-well pad drilling technology rather than single well pads. 

However, we’ve also seen an evolution take place when it comes to completing newly drilled wells, too. 

Back in the early years of the tight oil boom, companies started using a method called “zipper fracturing” that involved drilling multiple wells on a pad, then fracking one stage in a well while preparing the next. These multi-well completion methods were quickly adopted across the industry, which helped boost both initial production and ultimate recovery rates. 

Techniques such as simulfrac — where you essentially frack multiple wells at the same time — have become standard practice in operations. 

The thing is, we’re seeing even more new successful techniques. For example, Ovintiv is using trimulfracs to minimize downtime by fracturing three wells simultaneously. 

In fact, one small oil gem in the Permian Basin is having great success with a new method right smack in the heart of the Permian Basin. Not only is it cutting both the cost and drilling time for new wells, but I believe we’re going to see more drillers adopt this technique going forward. 

I recommend you take a minute and let me give you the full details right here.