We recently attended the 25th annual edition of NAPE in Houston, which was a bigger affair than in 2016 or 2017—and certainly this time around, the aisles were full of people in a more upbeat mood. It caused us to reflect on how much the oil and gas industry has changed in 25 years.

Yesterday, we wondered about peak oil supply and wondered where to drill next. Today we are fully engaged in the thrill of the drill. The U.S. has the geology, the technology and the capital to pursue ever more barrels of oil. The only limit appears to be diminishing returns as operators move into Tier 2 areas, having drilled up most of the Tier 1 locations.

Nothing better illustrates the dramatic progress of the past 25 years than this: the International Energy Agency just reported that U.S. oil production rose by another 1.3 million barrels a day (MMbbl/d) from January 2017 to January 2018. This is essentially the same amount of global oil demand growth anticipated for this year. We can handle it, OPEC!

Final numbers keep changing as the states revise their statistics, but at some point recently the U.S. surpassed 10 MMbbl/d of production—the most since 1970. Stratas Advisors projects we’ll increase another 1.1 MMbbl/d this year.

In another twist of fate, at press time a Saudi-flagged supertanker was loading a 2-MMbbl Shell Oil cargo of crude for export from the Louisiana Offshore Oil Port (LOOP), mitigating the need to dredge deeper at existing ports close to shore.

These achievements did not feature in anyone’s wildest dreams 25 years ago. Indeed, some of us at Oil and Gas Investor were involved in the discussions about creating something like NAPE. The event was conceived by a small group of forward thinkers within the American Association of Professional Landmen (AAPL), on the premise that something, anything (please!) was needed to kick-start the domestic E&P industry. Drilling activity was in the doldrums at the time, operators complained there were few good prospects left to drill, and declining U.S. production meant rising oil imports. This in turn added to the trade deficit, not to mention to geopolitical uncertainties. NAPE brought prospect generators and operators together to do deals and try to reverse these trends.

Fast forward to 2017 when the rise in U.S. oil production was accomplished in an environment where oil traded between $50 and $55/bbl. This phenomenal production growth rose at a faster pace than what industry could achieve when oil was higher, at $100/bbl.

One lesson is that commodity price is not the only driver. We might go so far as to say that technology has overcome commodity price to an unprecedented degree, pushing the U.S. oil supply revolution further along than anyone expected.

I ran across some impressive numbers recently that shine a light on just how much technological progress the industry has made. No, it’s not about reduced well costs, longer laterals of 2 miles, or super-intense fracturing. Bloomberg reported these impressive statistics: In 2017 Halliburton received 738 patents, somewhat close to the amount received by some Silicon Valley companies. Baker Hughes, a GE company, received 496 and Schlumberger received “only” 434. Bottom line, these three tech giants were granted the equivalent of four or five patents a day, all year long.

This is a message that needs to be shouted from the mountain tops. The industry needs to attract more young engineers and computer geeks who can deliver big data analytics to the oil industry. What’s more, it needs to show the public how high tech the industry has become in its quest to find and deliver more oil and natural gas supply.

Bernstein Research analyst Colin Davies outlines some structural changes he sees playing out. “The shorter-cycle nature of onshore development creates a more responsive but volatile industry where oilfield service activity, pricing and margins adjust rapidly to the oil price signal. We are moving away from the age of the oil mega-cycle to shorter, but less extreme, mini-cycles lasting a mere 18 months to two years.”

Davies pointed out that ... “given the tremendous improvements in drilling efficiency, enabled primarily by higher-specification rigs, the industry will only require a fraction of the number of rigs used in 2014. Hydraulic fracturing demand will grow faster than rig demand and the proportion of total well cost needed for the completion will increase.”

Domestic producers favor short-cycle shale, which can respond quickly up or down to oil price changes, and they can flourish at $50, according to RBC Capital Markets’ commodity strategist Michael Tran.

“While capital discipline has been stressed by both investors and producers, the backdrop of multiyear price highs, coupled with topped-up hedges, provides a license to drill.”

If these efficiency and productivity improvements hold, we’ll still see production growth, although perhaps at a slower rate. The question is, will global demand grow enough to prevent a glut?