Unconventional Oil Extraction: How Are Technological Advancements Paving the Way for the Industry’s Expansion?

Highlights:

• Introduction
• Steam-Assisted Gravity Drainage (SAGD) and Cyclic Steam Stimulation (CSS) technologies
• The growth of the industry in the North America region

The rising global population, increasing pace of industrialization, surging global trade, and rapid expansion of global supply chains have all boosted the growth in demand for energy. To reduce the carbon emissions caused by the power generation sector, there is a gradual shift toward renewable energy sources like solar, wind, hydroelectric, and even nuclear energy. However, since these renewables cannot completely replace conventional energy sources yet, the exponential rise in energy demand has led to the exploitation of conventional oil sources also. Due to these factors, unconventional oil and gas sources have become prominent in the past few years.

A survey on the technological advancements in the unconventional oil & gas exploration industry

Unconventional oil, as the name suggests, refers to the crude oil obtained using unconventional oil extraction methods instead of traditional well extraction. Unconventional oil extraction includes different methodologies and techniques like directional drilling, oil sands development, hydraulic fracturing or fracking, etc. To maximize the output of these oil extraction methodologies, several technological advancements and developments have taken place recently. Innovative techniques like steam-assisted gravity drainage (SAGD), cyclic steam stimulation (CSS), and expanding solvent steam-assisted gravity drainage (ES SAGD) have gained huge popularity owing to their efficiency in oil extraction.

For instance, steam-assisted gravity drainage (SAGD) is one of the most opted oil extraction techniques known for enhancing the volume of oil recovery. In this technique, steam is injected into the heavy oil reservoir to bring down its viscosity and smoothen its flow. Depending on the nature of the source, the steam-oil ratio can be adjusted accordingly. This aids the oil extraction company in using the reservoir to its fullest potential. Optimization of the steam-oil ratio also helps in keeping the steam chamber stable. This ultimately increases the contact between the steam and the oil, thereby facilitating better heat transfer. Due to these advantages, the steam-assisted gravity drainage (SAGD) segment of the unconventional oil industry is expected to garner the highest revenue share in the 2024-2033 period.

At the same time, the cyclic steam stimulation segment of the industry is also predicted to grow at a huge rate in the forecast rate. The primary reason why oil extraction companies opt for this technology is the low capital investment needed to install the associated technique. Also, the processes involved in this methodology are quite simple; this reduces the technical and economic risks associated with oil extraction and increases the overall profitability of the company.

Understanding the dominance of the North American region in the industry

In 2023, the North American region accounted for the highest revenue share in the unconventional oil industry. The massive investments made by oil and gas exploration industries in different technological advancements for unlocking unconventional oil reserves are projected to be the main reason behind the growth of this industry in the North American region. Along with this, the growing adoption of methodologies such as horizontal drilling and hydraulic fracturing has made it possible for oil companies to extract fuel from hitherto inaccessible deposits. In the past few years, geological studies commissioned by governments have found notable shale resources in regions like the Bakken Formation in North Dakota, the Montney Formation in Canada, and the Permian Basin in Texas, etc., which has increased the demand for unconventional oil in countries like the US and Canada.

Along with this, the merger and acquisition agreements signed by the oil and gas exploration companies are predicted to play a major role in the growth of this industry. For instance, in February 2024, Diamondback Energy, a leading oil company in the US, announced the acquisition of Endeavor Energy, another player in the oil industry. This acquisition is expected to open new avenues of growth for the company as well as the sector in the coming period.

To summarize, the unconventional oil industry is anticipated to grow massively in the years to come due to technological advancements in oil extraction techniques. Furthermore, the rise of the industry in North America and acquisitions by major companies are predicted to enhance the domain’s revenue share.

For a detailed analysis of the growth drivers and investment opportunities available in the industry, feel free to contact us.

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