The Fourth Shale Revolution: Supermajor Tech

Summary: Exxon, Shale, and the New “Prop” Technology

Peter Zeihan explains that the U.S. oil industry—especially shale oil—may be entering a fourth major technological upgrade, and ExxonMobil is driving it.

1. What Fracking Actually Is (in simple terms)

Fracking is how the U.S. now gets most of its oil and natural gas.

• A well is drilled deep underground, then horizontally for miles.
• High-pressure water mixed with sand is pumped in.
• The water cracks the rock.
• The sand stays behind in the cracks to keep them open so oil and gas can flow out.

The sand used to keep those cracks open is called a proppant (or “prop”), and it’s one of the biggest costs in fracking.

2. Why Exxon’s New Idea Matters

Exxon figured out a new way to upgrade the “prop” material:

• They took a waste product from their refineries called petroleum coke (normally cheap and leftover stuff).
• They turned it into a synthetic version of sand.
• This synthetic prop is 40–50% lighter than sand, so it floats and spreads more easily in the water.

Why that’s a big deal:

Because it’s lighter, it can travel deeper into the rock and hold more cracks open. That means more oil flows out per well.

3. The Results Are Surprisingly Large

For only a slightly higher cost than sand—and using something they would otherwise throw away—Exxon has seen:

• 10–30% more output per well

For oil companies, that is enormous. A 10–30% production jump just by switching the filler material changes the economics of the entire shale industry.

4. The Bigger Picture: A New Phase of the Shale Revolution

Zeihan describes four stages of shale:

1. Figuring out how to frack natural gas
2. Figuring out how to frack liquid oil
3. Building the infrastructure (pipelines, refineries, export facilities)
4. Now: applying the enormous money and engineering of major companies (like Exxon and Chevron) to push the technology further

In the earlier years, fracking was mostly run by small “mom and pop” drillers trying anything they could think of. But after several downturns in oil prices, Exxon and Chevron were able to buy many of the smaller players. Today the two companies produce nearly 9 million barrels per day combined.

With giants like Exxon now controlling the process and experimenting at scale, technological jumps like this new prop become possible.

5. Why This Suggests Shale Isn’t Running Out

Zeihan argues that people who say “shale will run out soon” misunderstand the resource. He makes these points:

• Before fracking, we could only access about 10% of the world’s underground hydrocarbons.
• Fracking dramatically expanded what is technically accessible.
• Each technological improvement allows companies to reach deeper pockets of oil that were previously impossible or uneconomic.

He claims the U.S. now effectively has 150+ years of supply at current production rates, and new tech like Exxon’s pushes that horizon even further.

6. Shale Output Keeps Rising

Since 2009, U.S. shale production has added 0.5 to 1 million barrels per day every single year. That’s a massive and ongoing expansion.

Zeihan’s bottom line:

The shale boom is not peaking. The technology is still improving, costs are falling, and big companies like Exxon now have both the scale and the incentive to keep the innovations coming.

From my discussion with ChatGPT on the subject of Exxon and Prop…

Exxon’s Advantage in the New Shale Technology 

Exxon’s big edge comes from the fact that it isn’t just an oil producer—it’s a fully integrated energy company. Most shale drillers simply extract oil. Exxon owns and operates refineries, chemical plants, research labs, pipelines, and massive shale acreage, all under one roof. That structure lets them do things smaller companies can’t.

1. They found a breakthrough in their own waste stream

The new proppant (the material that keeps rock cracks open during fracking) is made from petroleum coke, a cheap refinery byproduct. Independent shale companies don’t have refineries, so they don’t produce or control this material. Exxon can manufacture it, refine it, and tweak it specifically for fracking performance.

This is a built-in structural advantage—others would need to buy something Exxon essentially gets for free.

2. They can test and scale new tech instantly

Exxon has billions in R&D funding and thousands of wells to experiment on. Smaller producers often survive quarter to quarter and can’t afford large-scale trials.

When Exxon discovers something that works—even a small efficiency gain—they can roll it across entire shale basins. That’s how they achieved 10–30% more output in some wells just by switching the proppant.

3. Their scale and integration produce compounding benefits

Because Exxon owns so much of the value chain:

• their per-well cost structure keeps falling
• they can upgrade upstream and downstream operations at the same time
• they can capture profit at every stage—from drilling to refining to chemicals

This multiplies the impact of each improvement.

Competitors without this integration can’t replicate the whole system. Even Chevron—Exxon’s closest peer—is behind them on this specific breakthrough.

4. Are other companies doing the same thing?

Some firms have tried alternative proppants such as ceramics or specialty synthetics. But those options are expensive, and results have been inconsistent. Exxon’s version is unique because:

• the feedstock is cheap and proprietary
• performance is high
• the cost bump is small

Most producers will stick with basic sand until forced to change.

Investment Insight

• Exxon’s integration gives it a durable competitive advantage in the shale sector, especially now that they own large positions in the Permian Basin through acquisitions like Pioneer.

• A 10–30% production lift per well is enormous. It improves both margins and proven reserves, effectively lowering break-even costs.

• Exxon is positioning itself as the cost leader in shale, which tends to win in volatile oil-price environments.

• If this technology scales—and it likely will—Exxon widens its lead over independent shale operators and even Chevron.

• Over time, improvements like this can justify higher valuation multiples because they signal long-term, internally generated growth rather than growth purchased through acquisitions.

Bottom Line for Investors

Exxon is turning shale from a scrappy, high-decline business into a more predictable, technology-driven manufacturing process. That creates steadier cash flow and a deeper supply runway.