This model contains our live, basin-by-basin shale forecasts. It covers the Permian, Bakken and Eagle Ford, as a function of the rig count, drilling productivity, completion rates, well productivity and type curves. Thus, we derive production and financial expectations.
For 2022, the key challenge is stepping up activity levels, as the rig count must rise +60% YoY to keep early-2020s oil markets sufficiently supplied. Conversely, in 2021, production surpassed our expectations due to an unprecedented rate of DUC drawdowns, while well productivity was also stronger-than-feared.
Our longer-term numbers hinge on the productivity gainsdescribed in our thematic research. Shale productivity trebled from 2012-2018. We think it can rise another 45% by 2025, unlocking 15Mbpd of liquid shale production. However productivity could disappoint mildly in 2022 as the industry ramps activity levels back post-COVID.
We have also modeled the Marcellus shale gas play, using the same framework, in a further tab of the data-file. Amazingly, there is potential to underpin a 100-200MTpa US LNG expansion here, with 20-50 additional rigs.
CO2 and methane intensities are tabulated for 300 distinct company positions across 9 distinct basins in this data-file. Using the data, we can aggregate the total CO2 in (kg/boe) and methane leakage rates (as a percent of natural gas production) across the US’s different basins.
Covered basins include the Permian, Bakken, Eagle Ford, Marcellus/Utica, Alaska, GoM, Powder River, San Juan, Anadarko basin and DJ basin (chart above).
It is possible to rank the best companies in each basin, using the granular data, to identify industry leaders and laggards (chart below).
The database evaluates 950 technical papers that have been presented at shale industry conferences from 2018-2020. We have summarised each paper, categorized it by topic, by author, by basin, ‘how digital’ and ‘how economically impactful’ it is.
The aim is to provide an overview of shale R&D, including the cutting edge to improve future resource productivity. We estimate 2020 was the most productivity-enhancing set of technical papers of any year in the database.
Recent areas of innovationinclude completion design, fracturing fluids, EORand machine learning. We also break down the technical papers, company-by-company, to see which operators and service firms have an edge (chart below).
This model assesses the economics of a shale-EOR huff’n’puff project. NPVs and IRRs can be stress-tested as a function of oil prices, gas prices, production-profiles, EUR uplifts and capex costs. Our input assumptions are derived from technical papers. We think that economics are increasingly exciting, as the technology is de-risked. As more gas is stranded in key shale basins, base case IRRs rise from c15% well-level IRRs to c20%.
Is Shale-EOR the next wave of unconventional upside? The topic jumped into the ‘Top 10’ most researched shale themes last year. Stranded in-basin gas will improve the economics. Production per well can rise by 1.5-2x. The theme could add 2.5Mbpd to YE25 output.
We have modelled the economic uplift of extra digital instrumentation on a typical Permian well. If the data can uplift production by 2.5%, then c$0.4M of instrumentation costs would “pay back” (i.e., break even). If the data can uplift production by 10%, it would add +$1M of NPV and +5% IRR per well. These numbers are all shown at $50/bbl, but you can flex the inputs in our model.
Shale is a ‘tech’ industry. And the technology is improving at a remarkable pace. But Permian technology is improving faster than anywhere else. These are our conclusions after reviewing 300 technical papers from 2018. We address whether the Permian will therefore dominate future supply growth.
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