Larry Nichols understands how technology can change everything. It was Devon Energy Corp., after all—when Nichols was CEO—that bought George Mitchell’s company and a budding new technology to extract natural gas from shale rock in the early 2000s. Mitchell, of course, is known as the Father of Shale for his tireless decades of experimentation. But it was Devon under Nichols’ watch that applied the new strategy in scale.

Oil and Gas Investor bestowed Nichols, now chairman emeritus of Devon, with its Shale Visionary recognition at the Executive Oil Conference in Midland, Texas, in November.

The iconic $3.5-billion merger with Mitchell Energy, though, was not met with fanfare at the time, Nichols recounted. Soon after the deal was announced, when he was introduced at an investor conference, the host said, “Please welcome your next speaker Larry Nichols. He just blew his brains out.”

Mitchell had shopped the company a couple of years earlier with no takers, including Devon. “No one in the industry believed the technology would work; no one made a single offer of any size.”

Nichols got curious again when Mitchell’s production from the lowly Barnett Shale kept rising. His renewed interest was met with tepid responses from staff. Mitchell’s successes were contained to the heart of the Barnett, using mostly vertical wells, where the Viola Formation protected the newfangled fracks from the water-bearing Ellenberger. Where the Viola was absent, the wells watered out.

“We convinced ourselves we could combine two historic technologies: horizontal drilling and hydraulic fracturing. Both had been around for a while, but no one had ever done both. We decided to give it a try because, if we could solve that problem (fracking into the water), we could drill in a dramatically larger area and get dramatically more natural gas.”

Of course, it worked, spawning a paradigm shift in how producers extract gas and oil. Fifteen years later, that technology gamble has resulted in the U.S. leading the world in both oil and gas production. The geopolitical ripple effect is enormous and still occurring.

Over time, Devon extended its Barnett laterals from 500 feet to an astounding 1,000 feet and did multiple stages of fractures, a new concept. Eventually, the play became the hottest thing in the industry.

Nichols and another gas company CEO attended the annual trade association of utilities meeting around the mid-2000s, heavily attended by coal, nuclear and hydroelectric executives. “We were the first two CEOs from the natural gas industry that were ever there,” he said, “talking about this new technology and how you can now rely on natural gas as a base fuel. They said that was ridiculous.

“And look at where we are now, a little more than 10 years later. It has revolutionized the industry.”

Nichols noted equally revolutionary incremental changes in technology along the way, including the ability to drill in formation along a 3-mile lateral using real-time geophysical information. “In 2007, no one dreamed you could do that.”

The next technological step-change for the industry will come in the form of big data, Nichols predicted. “When you look at the computer’s ability to massage data in the last 10 to 15 years, it’s phenomenal.” And the industry is sitting on a treasure trove of data, he said, too much for our brains to process, even the smart ones.

Not that long ago, he remembered, companies would correlate data from a wall of logs. “It’s grade school stuff compared to what you can do with data today. It’s amazing.”

Data analytics is not only for the producer of scale, either, he noted, and is particularly advantageous to smaller companies with a limited data set.

“In part it’s the money you spend on it, but it’s having the data in the first place. You could have all the computer technology in the world, but if you can only get your hands on the five wells you have an interest in, your ability to understand that field vs. someone that has 500 or 1,000 wells in that field is a whole lot different.”

And data analytics will ultimately differentiate the new winners from the losers, whether a small or large player, he said. He pointed to operators that shunned horizontal drilling involving “complicated” hydraulic fracturing. “They have been left behind.” The same thing will happen with big data. “The companies that use it will have a competitive advantage.”

Because of new technology, the excitement that exists within the industry has never been higher, but never believe this is as good as it gets, as history has proved.

“Even with the technology we have now, we’re not getting 100% of the oil out. There is still a lot of oil that will be left with today’s technology.”

Who knows where the next major play—like the technologically revived Permian and Scoop/Stack—will rise up, he asked?

“Stay tuned.”

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