Two Majors’ Secret Race for the Future of Offshore Wind?

An exciting aspiration in wind technology is to obviate large, expensive “towers”, and unleash tethered kites into the skies. They can access 2-4x more wind-power at greater altitudes, and at 50-90% lower costs. Intriguingly, we have discovered Exxon and Shell are at the forefront of pursuing this new wind opportunity offshore, based on their patents and filings.

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Mozambique LNG: Can Chevron create more value?

It would be unwise to under-estimate the complexity of creating a new LNG province, with a 50MTpa prize on the table in Mozambique. After the first two trains are in motion, the longer-term opportunity is potentially “another Qatar”. But only if Mozambique can compete for capital with US greenfields and brownfield expansions.

Hence we have reviewed 200 of Chevron’s patents from 2018. The company’s ability to develop a new, deep-water LNG province is notable. Ten examples are tabulated below.

It was interesting how many of the patents were filed in Australia and may have derived from learnings at Gorgon and Wheatstone.

For a primer on different LNG process technologies, please see our data-file (here).

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Our Top Technologies for IMO 2020

So far we have reviewed 400 patents in the downstream oil and gas industry (ex-chemicals). A rare few prompted an excited thought — “that could be really useful when IMO 2020 comes around”.

Specifically, from January 2020, marine fuel standards will tighten, cutting the maximum sulphur content from 3.5% to 0.5%. It will reduce the value of high-sulphur fuel oil, and increase the value of low-sulphur diesel.

This note summarises the top dozen proprietary technologies we have seen to capitalise on the shift, summarised by company (chart below).

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EOG’s Completions: Plugged-In?

EOG has patented a system to deploy pressure and temperature sensors in its frac plugs, which are then retrieved at the surface, providing low cost data on each frac stage. The data can be used to improve subsequent frac stages. We model the economic uplifts at +$1M NPV and +5% IRR per well (at $50 oil).

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Is gas a competitive truck-fuel?

We have assessed whether gas is a competitive trucking fuel, comparing LNG and CNG head-to-head against diesel, across 35 different metrics (from the environmental to the economic). Total costs per km are still 10-30% higher for natural gas, even based on $3/mcf Henry Hub, which is 5x cheaper than US diesel. The data-file can be downloaded here.

The challenges are logistical. Based on real-world data, we think maintenance costs will be 20-100% higher for gas trucks (below). Gas-fired spark plugs need replacing every 60,000 miles. Re-fuelling LNG trucks requires extra safety equipment.

Specially designed service stations also elevate fuel-retail costs by $6-10/mcf. Particularly for LNG, a service station effectively ends up being a €1M regasification plant (or around $250/tpa, costs below).

We remain constructive on the ascent of gas (below), but road vehicles may not be the best option.

To flex our input assumptions, please download our data-model, comparing LNG, CNG and other trucking fuels across 35 different metrics .

Turn the Plastic Back into Oil

Due to the limitations of mechanical recycling, 85% of the world’s plastic is incinerated, dumped into landfill, or worst of all, ends up in the oceans. An alternative, plastic pyrolysis, is on the cusp of commercialisation. We have assessed twenty technology solutions. Excitingly, this nascent opportunity can turn plastic back into oil, generate >30% IRRs on investment, and could displace 15Mbpd of future oil demand.

These are the conclusions of our new, 16-page report…


We have diligenced 20 companies (above), operating 100 pyrolysis facilities globally. Our work included two site-visits and multiple patent reviews. Three early-stage companies hold particular promise. You can download our technology-screen here.

Larger companies (BASF, OMV, BP, TOTAL and Exxon) are also waiting in the wings, to scale up in this space. Their own patents and progress are reviewed in the note.

Economics will be strong, and should surpass 30% in our base case, modelled here. With another c25% deflation, it could become economical to deploy the technology in removing plastic from the ocean.

9Mbpd of oil and condensate are currently consumed for chemicals, as broken down here. Even as plastic demand trebles by 2050, plastic-recycling could eliminate any net demand growth for oil; or even halve it, as modelled here.

Machine Learning on Permian Seismic?

Pioneer Natural Resources is improving the accuracy of its Midland basin depth-models by up to 40%, using a machine-learning algorithm to re-calibrate its seismic from well logs. Faster drilling and better production rates should follow.

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Who else wants more shale?

The Majors’ deepening interest in shale was illustrated by Chevron’s $50bn acquisition of Anadarko. Consolidating in the Permian fits our ‘Winner Takes All‘ thesis.

But who else wants more shale in their portfolio? This is not to speculate on M&A, but simply looking at the companies’ research activity last year…

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If you would like to read our latest deep-dive note on shale-technology it is linked here. The full database, covering all 300 technical papers is available here.

U.S. Shale: Winner Takes All?

Shale is a ‘tech’ industry. The technology keeps improving at an incredible pace. But Permian technology is improving fastest, extending its lead over other basins.

These are our conclusions from assessing 300 technical papers across the shale industry in 2018. They are outlined in a new, 10-page note.


Across the board, we found 30% of our 300 technical papers should improve future economics. 60% were highly digital, and thus tended to be more impactful. Advanced analytics are still in an early innings.

The Permian stood out, extending its lead over other basins. It produced c25% of all the research; 25% higher-impact research and 40% more data-driven research.

Why the Thunder Said?

Energy transition is underway. Or more specifically, five energy transitions are underway at the same time. They include the rise of renewables, shale oil, digital technologies, environmental improvements and new forms of energy demand. This is our rationale for establishing a new research consultancy, Thunder Said Energy, at the nexus of energy-technology and energy-economics.

This 8-page report outlines the ‘four goals’ of Thunder Said Energy; and how we hope we can help your process…


Pages 2-5 show how disruptive energy technologies are re-shaping the world: We see potential for >20Mbpd of Permian production, for natural gas to treble, for ‘digital’ to double Oil Major FCF, and for the emergence of new, multi-billion dollar companies and sub-industries amidst the energy transition.

Page 6 shows how we are ‘scoring’ companies: to see who is embracing new technology most effectively, by analysing >1,000 patents and >400 technical papers so far.

Page 7 compiles quotes from around the industry, calling for a greater focus on technology.

Page 8 explains our research process, and upcoming publication plans.