In a heavy 10 inch saute pan set over medium low heat, slowly cook pancetta in 1 Tbsp olive oil until golden and crispy, 10 to 15 minutes. Remove pancetta to a plate lined with paper towels, leaving fat in pan. There should be about 2 tbsps. of fat left in pan. If not, add remaining 1 tbsp of olive oil. Have ready 1/2 cup water.
Put the pan over medium high heat, and arrange Brussel's sprouts cut side down in a single layer. Cook undisturbed until nicely browned, 2 to 3 minutes. When the sprouts are browned, add water to pan, cover immediately and simmer until the sprouts are are tender when poked, about 3 minutes. (If water evaporates before sprouts are tender add more water, 1/4 cup at a time.) With a slotted spoon, transfer the sprouts to a bowl.
Return pan to medium high heat, and if any water remains let it boil off. Add balsamic vinegar and a few grinds of pepper. Boil vinegar until it's reduced to about 2 Tbsps and looks syrupy, about 2 minutes. Reduce heat to low, add butter, and stir till melted.
Return the sprouts and pancetta to the pan and swirl and shake the pan to evenly coat the sprouts with sauce. Season to taste with salt and more pepper. Serve.