cv

Us Shale: Moving the US shale revolution forward

Recommended Posts

 

Moving the US shale revolution forward

 

Shales have transformed the US energy landscape, but opportunities exist to extract more value from this young resource and help it reach its full potential. Our four-part article series aims to study the learning curves, unearth success factors, and identify operational well-enhancement opportunities for US shale operators.

 

https://www2.deloitte.com/us/en/insights/industry/oil-and-gas/us-shale-revolution-playbook.html?id=us:2el:3pr:4di6417:5awa:6di:102319:&pkid=1006754

 

 

Deloitte study addresses shale's performance puzzle

 

 

New findings from Deloitte’s “Deciphering the performance puzzle in shales: Moving the shale revolution forward” research series suggests that if Eagle Ford and Permian Basin shale operators were to fully optimize their well designs, they could generate capital efficiency gains of 19 percent and 23 percent, respectively. This could represent a $24 billion capex saving opportunity for U.S. shale operators to strengthen their balance sheets and boost returns. 

“When it comes to efficiency gains, the industry seems presently divided on the outlook for shale wells. Some say gains have peaked, but Deloitte’s deepest foray into well-level data analytics revealed actionable insights which can help improve industry performance at a time when both investor sentiment and commodity prices are low,” said John England, partner, oil, gas and chemicals, Deloitte & Touche LLP. “The

 

 

findings clearly show that a one-size-fits-all approach to well design and completions is wasteful, and that it’s time for the industry to choose the right well design, not the biggest, to maximize efficiencies and profitability.” 

Key findings from the analysis include:

-Rock quality is important but is not necessarily the main performance differentiator. According to Deloitte’s analysis of all drilled wells in the Eagle Ford and Permian, the ranking of acreage (e.g., “Tier 1, Tier 2, Tier 3”) does not influence well performance to the extent previously assumed. More than 40 percent of wells drilled outside the core of the western Delaware area reported initial 180-day normalized productivity of more than 1,000 barrels of oil equivalent per day (boed). In the Eagle Ford, a comparable number of high-performing wells exist across acreage tiers.

-Bigger is also not always better. The statistical analysis further notes wells drilled over the last two to three years, with complex and intense completion designs (i.e., longer laterals, more proppants, etc.) actually led to diminished productivity, explaining some of the concerns from investors and financial markets. During this period, more than 3,000 wells that were completed with massive volumes of proppant (in excess of 1,800 pounds per foot) yielded productivity below 750 boed per 10,000 feet of perforated interval. Despite an increase in completion intensity of more than 40 percent, approximately 50 percent of U.S. horizontal wells had the normalized 180-day productivity of below 750 boed in the past four years. 

-Optimizing well designs can boost capital efficiency. Deloitte found approximately 67 percent of wells in the Permian have been under- or over-engineered. A more balanced formation-and-engineering equation could improve the capital efficiency of Permian operators by approximately 23 percent. Similarly, approximately 60 percent of Eagle Ford wells have been under- or over-engineered. An optimal completion design strategy could increase capital efficiency of Eagle Ford operators by 19 percent.

-$24 billion could be at stake via optimization. Improving well-designs has the potential for U.S. shale drillers to reduce capital requirements by $24 billion. If achieved, E&Ps could achieve economic targets in a broader range of price scenarios, and thereby revive investor interest, per the analysis.

-Myriad solutions to consider. To succeed, shale companies can utilize more sophisticated data analytics and balance experimentation and standardization. Technology is king, and knowing the reservoir is critical. Therefore, E&Ps should consider investing in advanced technologies such as microseismic monitoring, fluid tracking and tracer analytics, among others, to understand how and why the reservoir is behaving in a certain fashion and then augment the development approach. 

Sustaining shale efficiency gains and building resiliency

Optimizing well designs is an important priority, but the industry shouldn’t stop there, Deloitte notes. To make truly sustainable improvements and build resiliency against future price cycles, operators should work with all stakeholders in the oil and gas ecosystem. For example, E&Ps should co-share the productivity benefits with oilfield service companies, and design new win-win contractual arrangements with infrastructure providers. 

Importantly, E&Ps should also win back investors’ trust through more consistent transparency and reporting details of performance. Companies should standardize how they report well results and look to third parties to help. Large institutional investors, energy agencies, and shale industry associations along with data aggregators could play a big role in standardizing performance benchmarks for the shale industry and its investors.   

“Even though we’re over 10 years into the shale era, the industry is actually in the early stages of understanding. As with any new resource, the early phase of growth is also the initial phase of evolution and experimentation,” said Scott Sanderson, principal, Deloitte LLP’s oil and gas strategy and operations practice. “Now we are more aware of the challenges facing the viability of shales, and ‘brute force’ is not necessarily the answer. E&Ps should use analytic insights like this to course-correct both operational tasks and commercial arrangements to bring sustainable benefits to shareholders and the extended oil and gas ecosystem.”

 

https://www2.deloitte.com/us/en/insights/industry/oil-and-gas/us-shale-revolution-playbook.html?id=us:2el:3pr:4di6417:5awa:6di:102319:&pkid=1006754

 

Share this post


Link to post
Share on other sites

I assume that Tier means the most cost efficient parts of the least meaning generally shallower and least technical to drill?

If so then it might be the case that tier 3 might very well produce just as well but cost a lot more to drill and complete?

 

Share this post


Link to post
Share on other sites

1 minute ago, El Nikko said:

I assume that Tier means the most cost efficient parts of the least meaning generally shallower and least technical to drill?

If so then it might be the case that tier 3 might very well produce just as well but cost a lot more to drill and complete?

 

Tier1 , usually most productive .

 

___________________

https://www.bakerinstitute.org/files/9349/

image.png.bafe866363867a77a1de81bf6cb3b832.png

Share this post


Link to post
Share on other sites

1 minute ago, ceo_energemsier said:

Tier1 , usually most productive .

 

___________________

https://www.bakerinstitute.org/files/9349/

image.png.bafe866363867a77a1de81bf6cb3b832.png

Thanks, this year was the first time (I can remember) where we drilled very deep wells 12,000ft + deep in the Eagleford and for more than one customer which got me thinking that maybe there are less easy to reach shallow leases available or that maybe they'd maximised the easy stuff for profit first. It might mean that the future of shale could be wells that start taking longer to drill again which would reduce their competativeness and be a positive in the long term. 3 days to drill 10k laterals (from kick off point to TD) is crazy and was unheard of a few years ago.

Share this post


Link to post
Share on other sites

Production from shale wells declines quickly, but operators can cushion the fall. Sustaining base production is often the best use of capital, a quick way to generate cash, and a key pillar for producers seeking to transform their operations.

 

Sustaining the base: A new focus in shale’s quest for cash

 

 

https://www.mckinsey.com/industries/oil-and-gas/our-insights/sustaining-the-base-a-new-focus-in-shales-quest-for-cash

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.