COMMENTARY: Witnessing the ongoing transformation of the oil and gas industry

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Photo courtesy: Gazprom

By Alessandro Blasi, Senior Programme Officer, IEA

The last few years have been particularly challenging for the oil and gas industry. From the natural gas shale revolution beginning about a decade ago to the dramatic shale-oil discoveries, the industry has witnessed spectacular technology developments, such as including hydraulic fracturing and horizontal drilling. In just five years between 2008 and 2014 US shale oil production rose from near-negligible levels to almost 4 million barrels per day.

This unexpected ramp-up shook up global energy markets. The sudden emergence of US shale producers disrupted market balances even as producers in the Middle East and Russia continued to pump at a record pace. As markets became oversupplied, prices dropped sharply in 2014. As a result, global upstream investment fell by almost $350 billion. Projects were delayed or cancelled, hundreds of thousands of jobs were lost and many companies saw their financial health deteriorate.

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