U.S. shale oil producers need help.
Saudi Arabia and other OPEC members want to drive the shale producers out of business. So, the OPEC cartel floods the market with cheap crude oil to keep prices so low that the Americans can’t make money.
Coming to the rescue, Biota Technology can do something that has never been done before. It uses DNA sequencing to help U.S. shale producers slash the cost of oil production.
DNA sequencing is a game-changer.
Unlocking the human genome was one of the first great triumphs of the New Gilded Age. By mapping the building blocks of life, researchers hoped to find the paths toward groundbreaking new treatments and precision therapies.
This is kind of what Biota is doing. It uses all of the advances made in DNA sequencing plus some sophisticated data analytic software to find the best places to drill new oil wells.
Most U.S. shale exploration at present is based on old science. Microseismic, petrophysical and geochemistry technologies were designed for finding conventional crude and offshore oil. Shale production is a different beast entirely.
Shale producers poke holes in the ground, then inject a high-pressure mixtures of water, sand and chemicals to fracture the shale layer, which releases trapped oil. And they do this all while hoping that they’ve arranged their wells appropriately to capture the fossilized dinosaur goo.
Ajay Kshatriya, chief executive and co-founder of Biota, believes Subsurface DNA Diagnostics can help. Math and science aside, the idea seems simple enough:
Rock shavings are collected from the wellhead, and DNA microbe samples are extracted. From there, techs use DNA sequencing and data analytics to model the subsurface depth, size and shape of the oil reservoir. Ultimately, the goal of the model is to enable better placement of future wells for capture.
“This is a whole new way of measuring these wells and, by extension, sucking out more oil for less,” says Kshatriya.
It could not come at a more opportune time for U.S. shale producers. Reuters reports the American drillers have already slashed costs by 50% over the past two years in an effort to stave off OPEC attacks. Although the cartel has been friendlier lately, there is no telling how long that will last.
While Biota will not say exactly how much its technology will cost, Kshatriya claims it should not exceed 1% of the total cost to bring a new well fully online. According to a March 2016 report from U.S. Energy Information Administration, that ranges from $5 million to $8 million, depending on geology.
So far, the company has been involved in about 80 wells, primarily in North Dakota and Texas. And big players like Statoil ASA and EP Energy have nothing but good things to say.
C. Wan, geophysical advisor at EP Energy, told CEP Magazine: “The DNA Diagnostics tool is being used to address real unmet challenges in our Permian Basin fields. The early results are promising, and if DNA sequencing can be proven to work, it would be a game changer for our company and the industry.”
When the Human Genome Project was completed in 2003, I doubt anyone would have bet its building blocks would be used for oil exploration. Yet, 14 years later, there is a very real possibility the science will save the U.S. shale business and thousands of jobs.
That’s the promise of the New Gilded Age. It gives entrepreneurs license to create new technologies where none existed. It allows new business models, new enterprises, new opportunities for investors to profit.