The Key to Saving the U.S. Oil Patch

People have a habit of saying that times used to be simpler. And in some regards, it was. 

Close your eyes for a moment and put yourself in Beaumont, Texas back on January 10, 1901. 

You woke up that morning, put on the only suit hanging in the closet and donned your finest hat. After a little walk, you find yourself amongst a large crowd of people standing near a most peculiar wooden contraption.

At that moment, you start to wonder if the trip was going to be worth it.

Then your jaw drops as a flood of black liquid suddenly gushes out of the wooden structure. You look on in awe as thousands of barrels of crude oil spewed more than 150 feet into the air from what became known as the Lucas Geyser

Here’s a snippet of what it looked like:

At Spindletop alone, more than 3.5 million barrels of crude oil were produced in the first year; by year two, output had soared to over 17 million barrels. 

Soon, the sight of these oil derricks dotted the landscape as far as the eye could see: 

The rest, you could say, was history. 

The Trouble With Oversimplifying 

Although the gushers that were seen in the early days of the United States’ first oil boom seemed simple, they were not at all. 

We see pictures of gushers like the one above, and a lot of people out there probably think how easy things must have been. After all, stick a drill in the ground and watch as hundreds of thousands of barrels of oil gushes out of the ground. 

Pretty simple, right?

Back then, it wasn’t uncommon to hit a dry hole.

Over time, however, things sort of flipped. In fact, we almost have the opposite problem today than we did in the days of Spindletop. 

Technology has been the one saving grace that has kept our oil flowing. Geologists today can tell you with pinpoint accuracy where to find the oil underground. 

The real question is how much would it cost to extract. 

You can see a perfect example in Venezuela. Venezuela may hold the world’s largest amount of proven oil reserves, but all that heavy, poorer quality crude is going to stay locked underground until it’s economically feasible to go after it. Granted, PDVSA has even greater problems than the cost of crude, but we’ll save that diatribe for another day. 

Unfortunately, we’ve come to oversimplify our oil supply once again. 

Few Americans probably realize what it took to get U.S. oil output back into record highs in 2023. 

Mind you, this achievement took place despite a hostile government that has demonized the industry for the last several years, and did its best to subdue production — offering the fewest offshore oil and gas leases in history certainly didn’t help either. 

But now that we’re back in record territory, you should start to wonder how we’ll ever get it to grow from here.

Well, let me tell you…

The answer can be found right in the EIA’s own Short-Term Energy Outlook. You see, the EIA knows just as well as we do that fewer rigs in the field is a signal that production growth is limited. 

Yet, it still believes that crude oil production in the U.S. will grow to average 13.4 million barrels per day in 2025, and it’ll do so because of just one thing: Efficiency. 

For the last few years, our oil companies have been getting better and better with every new well they drilled… and one company is actually taking things to a whole new level. 

If the key to growth is through boosting drilling efficiency, the most valuable technology today would be a game-changer for the entire industry. 

Perhaps it’s time you saw it with your own eyes. 

Until next time,