Oil industry CO2 per barrel?

We have constructed a simple model to estimate the CO2 emissions of commercialising an oil resource, as a function of a dozen input variables: such as flaring, methane leakage, gravity, sulphur content, production processes and transportation to market.

We estimate energy return on energy invested is c7-10x across the entire oil industry, including upstream, midstream and downstream.

Different resources are compared using our methodology. Relative advantages are seen for large, well-managed offshore oilfields and shale. Relative disadvantages are seen for heavy crudes (e.g., Oil Sands, Mexican Heavy) and producers with low regard for flaring and methane emissions (e.g., Iran, Iraq). However, gas production is lower CO2.

Download the model and you can quickly compute approximate CO2 emissions for other resources.

US Shale: No Country for Old Completion Designs

2019 has evoked resource fears in shale, after some E&Ps posted disappointing results, and implied productivity data fell 20% YoY,  according to the EIA’s data.

We find the data-issues are benign. They reflect changes to completion design, as a bottlenecked industry increased its use of cube development and flowback control.

Underlying productivity continues improving at a phenomenal pace. These conclusions are derived from reviewing 350 technical papers filed by the shale industry over summer-2019.

Ventures for an Energy Transition?

This database tabulates c200 venture investments made by 8 of the leading Oil Majors, as the energy industry advances and transitions.

The largest portion of activity is still aimed at incubating Upstream technologies (c40% of the investments), as might be expected.

But leading Majors are also building rapid capabilities in new energies (38%) and digital (36%), as the energy system evolves. We are impressed by the opportunities. Venturing is likely the right model to create most value.

The full database shows which topic areas are most actively targeted by venturing; including by company. We also chart which companies have gained stakes in the most interesting start-ups.

US Shale Gas to Liquids?

We have reviewed 42 of Shell’s GTL patent filings for 2018. They show continued progress, innovating new fuels, lubricants, renewable-heavy gasolines, waxes and detergents. Each patent is summarised and categorized in this data-file.

All of this begs the question whether there is a commercial rationale for a US replica of the Pearl GTL project, to handle the over-abundance of gas emanating from the Permian; and produce these advantaged products. It would also help reduce the risk of US LNG projects glutting the market.

We therefore model the economics in this data-file, using prior project disclosures and our learnings from the patent history. Our base case IRR is 15%, taking in 1.6bcfd of shale gas. Resiliency is tested by varying oil and gas prices.

The cutting edge of shale technology?

This data-file reviews 300 technical papers from 2018 and 350 technical papers from 2019. Hence, we can  identify the cutting edge of shale technology. Each paper is summarised, categorized by topic, by country, by basin, by company and by ‘impact’.

The YoY trends in 2019 show an incredible uptick in EOR, machine learning and well spacing studies, which are fully reviewed in the file.

On our assessment, one third of the papers support material improvements in well-productivity.  c98% are data-driven, including c39% using advanced computational modelling and another c20% using data to optimise operations.

The Permian hosted the most research, pulling further ahead of other basins. You may be surprised by the identities of the companies publishing the most technical papers in shale.

CO2-EOR in Shale: the economics

We have modelled the economics of CO2-EOR in shale, after interest in this topic spiked 2.3x YoY in the 2019 technical literature. Our deep-dive research into the topic is linked here.

The economics appear very positive, with a 15% IRR under our base case assumptions, and very plausible upside to 25-30%.

The model also allows you to stress-test your own assumptions such as: oil prices, gas prices, CO2 prices, CO2 tax-credits, compressor costs and productivity uplift. The impacts on IRR, NPV and FCF are visible.

The Ascent of Shale

This model contains our live, basin-by-basin shale forecasts. We model each of the Permian, Bakken and Eagle Ford, as a function of the rig count, drilling productivity, completion rate, well productivity and type curves. Thus, we derive production and financial expectations.

Our numbers hinge on the productivity gains described in our thematic research. Shale productivity trebled from 2012-2018. We think it can effectively double again by 2025. This would unleash 21Mbpd of US liquids production by 2025, within cash flow at a flat $50/bbl Brent input.

Permian Pipeline Bottlenecks?

This data-file tracks c50 oil and gas pipelines in the Permian basin — their route, their capacity and their construction progress — in order to assess the severity of pipeline bottlenecks.

Our assessment is that the Permian’s oil bottleneck is currently moderate, while the gas bottleneck is severe.

Both will see new pipeline additions. Oil bottlenecks are thereby relieved, while gas bottlenecks remain more constrained.

It is interesting to consider how the bottleneck will impact completion activity among operators in the basin, and by extension, implied productivity data…

Dreaming of Electric Frac Fleets?

In 2019, the virtues of switching diesel-powered frac fleets to gas-powered electric have been extolled by companies such as EOG, Shell, Baker Hughes, Halliburton, Evolution and US Well Services.

The chief benefit is a material cost saving, quantified  per well in this data-model, as a function of the frac fleet size, its upgrade costs, its fuel usage. diesel prices and gas prices.

Additional benefits are also noted in the file, such as CO2 reductions, higher reliability, smaller pad sizes, NOX reductions and noise reductions. We also think over the long run, 200mmcfd of stranded Permian gas could be absorbed.

Shale: Upgrade to Fiber?

Completing a shale well depends on over 40 variables. Each one can be optimised using data. It follows that next-generation data could deliver next-generation shale productivity.

This note focuses on the most exciting new data methodology we have seen across the entire shale space: distributed acoustic sensing (DAS) using fiber-optic cables. It has now reached critical mass.

DAS will have six transformational effects on the shale industry. Leading operators and service companies are also assessed.