Liberty Resources CEO Chris Wright describes himself as part science and tech geek, part oil-and-gas guy, and part entrepreneur.
Many in the American oil industry know him as one of the pioneers who made drilling more efficient on the cusp of the steepest crude oil downturn in decades.
U.S. drillers like Liberty have confounded expectations by driving down the break-even cost of producing a barrel of oil through innovation and cost-cutting. One of the tools producers are increasingly turning to is a type of high-intensity hydraulic fracturing that helps them produce oil and gas more economically.
Hydraulic fracturing, or fracking, is the process of pumping water, minerals and chemicals into shale rock beneath the Earth's surface to break them up and release oil and gas. It has driven America's booming production of shale oil throughout the last decade. But more recently, companies like Liberty and EOG Resources have advocated a fracking method that uses more water and minerals to break up shale at high pressure in multiple stages.
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The pressure creates massive networks of fissures, while large amounts of sand and ceramic, known as proppants, keep shale fractures open, allowing crude to flow. Using more water and minerals increases the cost of fracking, but the enhanced completion techniques can boost production rates in the first crucial year of production and beyond.
That's important, because fracking wells reach peak production quickly and then enter a rapid rate of decline, followed by a long tail of low output. Better production in the first year leads to higher total recovery over the lifetime of the well.
American drillers are looking for advantages at a time when oil prices are mired in a protracted downturn and top oil exporter Saudi Arabia insists that U.S. producers should be the first to cut output and balance an oversupplied market.
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High-intensity fracks, combined with other oilfield improvements, have kept some acreage profitable even as drillers slash capital spending, analysts told CNBC.
"I think a lot of areas in both the Bakken and Eagle Ford, and even the Permian, wouldn't work without the improved completion," said Stifel Nicolaus analyst Michael Scialla, referring to some of the country's most prolific shale plays, located in North Dakota and Texas.
Founded in Septermber 2010, Liberty began openly advocating for high-density fracking in 2011 and started adding customers the following year.
Wright now runs both Liberty Resources, an exploration and production company that drills in North Dakota's Bakken shale, and Liberty Oilfield Services, a separate firm that provides services to other producers in Colorado, Wyoming and North Dakota.
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Both companies utilize a method of fracking called plug-and-perf and a mix of water, minerals and chemicals called slickwater to create massive networks of fractures. These fracks contain a large amounts of ceramic, which keep the fissures in the shale rock open, promoting conductivity.
Despite a reduction in well completions this year, Liberty Oilfield Services pumped 75 percent more fracks in the first seven months of 2015 compared with the same period last year. Its client list has doubled to about four dozen companies from last summer.
"That's in an imploding market, so that's capturing giant market share gains," Wright told CNBC.
An idea catches on
Wright said he's seen a groundswell of interest in the last 12 months. Roughly half of the operators in the Bakken are now talking about increasing frack intensity, he said. While the number of wells being drilled there has fallen by about 50 percent since the oil price downturn, total consumption of sand and ceramic proppant has only dropped by about 25 percent, he added.
Analyst said the early adopters include Whiting Petroleum and Oasis Petroleum in the Bakken, and Concho Resources in Texas.
Whereas drillers previously pumped 300 to 500 pounds of frack fluid per foot, they might now pump 1,500 to 2,000 pounds per foot, said Will Green, energy analyst at Stephens Investment Bank.
"When people see these enhanced completions take place, the idea among skeptics was maybe you were pulling forward the resource" on the front end "and not benefiting longer-term well results," he said.
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However, he noted that in the final quarter of 2014, Concho Resources reported an 18 percent increase in average 30-day production rates in the Northern Delaware Basin in Texas and New Mexico from the previous year. At the same time, it saw a 75 percent jump in cumulative production over 180 days for wells that used enhanced completion methods.
That means Concho not only achieved a much higher rate in the first 30 days, but a much shallower decline in subsequent production, Green said.
While improved fracking methods are keeping some areas economic, the margins are getting pretty skinny, Wells Fargo analyst David Tameron told CNBC.
"If you stay at $40, there will be a meaningful number of companies that don't make it," Tameron said. "Even with the efficiency gains, you'd need to have a change somewhere."