United States hydraulic fracturing's short-cycle revolution and the global oil industry's uncertain future

摘要

The global oil industry has entered into a period of debilitating uncertainty. Two forces - renewable energy and price volatility - call into question the profitability of investing in the massive, decades-long conventional projects which form the backbone of global production. Facing a volatile, unknown future, energy financiers are retracting from long-term projects. United States (US) hydraulic fracturing has offered a partial solution. The unique material properties of hydraulic fracturing give it-relative to conventional production-a small investment scope with a short cycle of production. This flexible production process has helped sections of the industry avoid the commodity's uncertain outlook by narrowly focusing on the near term. However, hydraulic fracturing, while offering a different temporal and financial scale of investment, is often more expensive per barrel. Confronted by COVID-19 disruptions, massive debt, and public contestation, some predict the end of fracking, as the least profitable, most indebted players go under. This paper hypothesizes that intensifying uncertainty over the future of oil - above all from the renewable energy transition - will, however, ironically further stimulate this destructive form of extraction.