DENVER—Horizontal drilling and hydraulic fracturing, what the president and CEO of IHS calls “disruptive technology,” have changed the balance in the world of energy.

“The disruptive technological advances in drilling and fracturing have reshaped the oil and gas supply-and-demand balance with worldwide implications. Energy companies must now cope with their own success as dramatic energy supply increases are coupled with a decrease in worldwide demand—the ‘great deflation’,” Scott Key said.

Key was keynote speaker at the Denver 3D Seismic Symposium that was presented by the Denver Geophysical Society and the Rocky Mountain Association of Geologists.

“Oil prices have fallen by more than 40% since June of 2013, when it was $115 a barrel compared to its current per-barrel level of around $50. This comes after nearly five years of stability. In a Vienna meeting in November, OPEC, which controls nearly 40% of the world market, did not reach agreement on production curbs, sending the price tumbling.”

The most influential member of OPEC, Saudi Arabia, could have sent the price up by deciding to pump less. Unlike cash-strapped oil exporters such as Venezuela, the Kingdom has savings of $900 billion and its production costs are $5-6 a barrel, the lowest in the world, Key said.

U.S. production of crude oil and natural gas liquids passed all other countries in 2014 with daily output exceeding 11 million barrels in the first quarter. The country became the world’s largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids.

“Falling oil prices are disrupting our economy. We now have job losses, lower rig counts and less demand for oil-field-related industries such as seismic and technology for finding and producing oil,” Key said.

“In disruptive times, challenges abound. The recovery factor in the leading tight oil plays averages about 6-8%. Shale gas plays, while averaging better recoveries than tight oil, are still challenged by marginal economics at current prices.”

Scott noted that while the U.S. economy has been successful in getting out of the worldwide recession of 2008, other economies have not fared so well. In turn, that is keeping demand soft.

He also noted that despite significant turmoil in Iraq and Libya, production as not been affected.

“Those at greatest risk are smaller American companies that have borrowed heavily on the expectation of continuing high prices. They also include Western oil companies with high-cost projects involving deepwater drilling or in the Arctic, or dealing with maturing and increasingly expensive fields such as the North Sea.”

Additional pain, according to Key, is being felt in countries such as Russia, which are dependent on a high oil price.

Low natural gas prices and availability have actually aided the U.S., Key said. “Energy resource-poor industrial giant Germany decided that it was more economically feasible and advantageous for them to build new factories and rely on the U.S. industrial complex, rather than develop industrial technology in its own country primarily due to America’s large natural gas supply and its low cost. And like Germany, China is also investing their money in building factories in Texas and Louisiana.”

While falling prices are not great for the petroleum industry in the U.S., Key noted that as other countries look to develop their own unconventional resources the U.S. has one key and distinct advantage over all the other countries.

“Developing Asian areas such as China, Southeast Asia, India and Pakistan may have the resources, but they do not have the now-essential and sophisticated unconventional resource technologies, such as 3-D seismic, imaging and interpretation that we have for efficiently finding and producing oil and gas.”