This presentation covers our outlook for the US shale industry in the energy transition, and was presented at a recent investor conference.
The importance of shale oil supplies in a fully decarbonized energy system is contextualized on pages 1-7. Production must grow by a vast 2.6Mbpd in 2022-25 to keep oil markets well supplied, even as oil demand plateaus. Otherwise, devastating oil shortages may de-rail the transition.
This requires a 5% CAGR in shale productivity. We argue in favor of future productivity growth, based on the evidence from 950 technical papers, which we have reviewed, on pages 8-12.
But can the industry attract capital? This now hinges upon carbon credentials. Laggards will have >25kg/boe of upstream CO2 while leaders have the opportunity to be CO2-neutral. The division (and the prize) is outlined on pages 13-19.
Our research identifies economic opportunities in the energy transition. To do this, we have now drawn upon 20M patents. This 14-page note illustrates the six ways that patent analysis can give decision-makers an edge.
This data-file tabulates the costs of carbon offsets being offered to consumers and commercial customers by c30 companies. Prices are surprisingly low, ranging from $4-40/ton of CO2.
Which projects are most economical? Costs are lowest at forestry projects, particularly at companies where you pay “per tree” rather than “per ton” of CO2. They are also lower at non-profits (which also means contributions are tax-deductible). Finally, they are lowest at companies undertaking projects directly, rather than as “middlemen” (charts below).
Are they CO2 offsets real? The also file contains detailed notes on each company, to assess their credentials. Moreover, it tabulates 1,600 carbon offset projects which are assured by agencies such as the ‘Verified Carbon Standard’, Gold Standard and Green-E, for a broader perspective.
Carbon capture is cursed by colossal costs at small scale. But blue hydrogen may be its saviour. Crucial economies of scale are guaranteed by deploying both technologies together. The combination is a dream scenario for gas producers. This 22-page note outlines the opportunity and costs.
Overbuilding renewables may have unintended consequences, making power grids more expensive and less reliable. Hence more businesses may choose to generate their own power behind the meter, installing combined heat and power systems fuelled by natural gas. Modelled IRRs already reach 20-30%. Capturing waste heat also boosts efficiency to 70-80%, which can be 2x higher than grid power, lowering total CO2 by 6-30%. This 17-page note outlines the opportunity and who might benefit.
Almost 1% of global CO2 comes from distillation to separate crude oil fractions at refineries. An alternative is to separate these fractions using precisely engineered polymer membranes, eliminating 50-80% of the costs and 97% of the CO2. We reviewed 1,000 patents, including a major breakthrough in 2020, which takes the technology to TRL5. Refinery membranes also comprise the bottom of the hydrogen cost curve. This 14-page note presents the opportunity and leading companies.
China’s pace of technology development is now 6x faster than the US, as measured across 40M patent filings, contrasted back to 1920 in this short, 7-page note. The implications are frightening. Questions are raised over the Western world’s long-term competitiveness, especially in manufacturing; and the consequences of decarbonization policies that hurt competitiveness.
Whale oil was a dominant, albeit barbaric, lighting fuel in the 19th century. But what happened to pricing as the industry was disrupted by kerosene and ultimately by electric lighting? We find whale oil pricing maintained a 25x premium to rock oil and outperformed other commodities as the whale oil market collapsed. As whaling declined, the prices of by-products (e.g. whale bone) also rallied very sharply. This 8-page note presents our analysis of the whaling industry from 1805 to 1905 and draws implications for the future of the oil and gas industry.
Energy policies currently act as kingmakers for a select few transition technologies. But they offer no incentives for other, lower cost and more practical alternatives, which could economically decarbonize the whole world by 2050. Hence this 14-page note presents the top five arguments for a simple, transparent, economy-wide CO2 price. We also illustrate who would benefit versus which bubbles may burst.
Future US shale productivity can still rise at a 5% CAGR to 2025, based on evaluating 300 technical papers from 2020. The latest improvements are discussed in this 12-page note, and may spark more productivity gains than any prior year. Thus unconventionals could grow by 2.6Mbpd per annum from 2022-25 to quench deeply under-supplied oil markets. But hurdles remain. The leading technologies are also becoming concentrated in the hands of fewer operators and an emerging group of oil services.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.