US Shale: No Country for Old Completion Designs

2019 has evoked resource fears in the shale industry. They are unfounded. Even as headline productivity weakened, underlying productivity continues improving at an exciting pace. These conclusions are substantiated by reviewing 350 technical papers, published by the shale industry in summer-2019. Major improvements are gathering momentum, in shale-EOR, machine learning techniques, digitalization and frac fluid chemistry.


Discussed companies include Apache, BP, Conoco, Chevron, Devon, ExxonMobil, Halliburton, Occidental, Pioneeer & Schlumberger.

Page 2 compares 2019’s shale performance to-date with our January forecasts, identifying that initial-month producutivity has been 20% weaker YoY.

Page 3-4 shows how continued productivity improvements matter, to unlock >20Mbpd of potential US shale output, plus $300bn of FCF by 2025 (at $50/bbl oil).

Pages 5-8 explain away the apparent degradation in resource productivity: it is a function of three alterations to completion designs.

Pages 9-12 outline 350 technical papers from the shale industry in summer-2019. They restore confidence: the industry is not facing systemic resource issues.

Page 12 covers 24 technical papers into “parent-child” issues. We were surprised by the number that were ‘negative’ versus the pragmatic solutions offered in others.

Page 13, 14 & 17 cover leading digitalization technologies: deployment of machine learning increased 5x YoY, while DAS/DTS increased 3x YoY in 2019.

Pages 14-16 cover the maturation of shale-EOR, which was the greatest YoY improvement, reaching 32 papers in 2019. The cutting-edge of EOR is exciting.

Page 18 outlines other technical highlights to drive future productivity higher.

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 will deliver next-generation shale productivity. Hence our new, 25-page note focuses on the most exciting new data methodology we have seen across the shale space: distributed acoustic sensing (DAS) using fiber-optic cables. It has now reached critical momentum, to transform the shale industry in six main ways…


(1) Productivity gains. DAS advances the shale industry’s quest for ‘ideal’ completions (chart above). The best studies to-date have already achieved c25% production uplifts and c10% cost-savings. Pages 2-14 describe the technology, its maturation and the recent step-change for its application in shale.

(2) Further DAS improvements could deliver further productivity gains throughout the 2020s, materially lowering the long-term decline rates in shale basins (see page 17).

(3) Economics break even at $15/bbl when deploying DAS in a cross-well, adding $0.8M of NPV10 at ($40/bbl oil) (see page 18).

(4) DAS levels the playing field, allowing newer basins and smaller operators to derive competitive designs quickly. Without this ability large operators in the Permian will crowd out the rest (see pages 15-16).

(5) DAS disrupts the Services industry, gaining dominance over other diagnostic techniques, such as seismic. Services’ adaptability is screened (see pages 20-21)

(6) DAS will give E&Ps and Majors an edge. To help quantify who is in the lead, we identify and rank the “Top Dozen” operators’ progress, based on their patents and technical papers (see pages 22-24) .