Chevron: SuperMajor Shale in 2020?

SuperMajors’ shale developments are assumed to differ from E&Ps’ mainly in their scale and access to capital. Superior technologies are rarely discussed. But new evidence is emerging. This 11-page note assesses 40 of Chevron’s shale patents from 2019, showing a vast array of data-driven technologies, to optimize every aspect of unconventionals.


Page 2 explains how we assessed Chevron’s shale patents, to identify technologies that could support guidance for 900kboed of Permian production by 2023.

Page 3 sets out Chevron’s technologies for shale exploration and appraisal, based on recent seismic patents.

Page 4 sets out Chevron’s technologies for shale drilling, based on recent patents, many of which are co-filed with Halliburton, around a specific innovation.

Pages 5-8 set out Chevron’s technologies for shale completions, through an array of sophisticated, proprietary and increasingly digital technologies. These will not only help in the Permian, but also in de-risking international basins.

Page 8 sets out Chevron’s potential edge in completion fluids. We are particularly excited by the promising results from field-tests of anionic surfactants.

Page 9 sets out Chevron’s data-driven flowback practices, including productivity gains from field tests in the Vaca Muerta.

Pages 10-11 set out Chevron’s technologies for upgrading NGLs into gasoline-, jet- and diesel-range products, using industry-leading ionic liquid catalysts.

Page 11 concludes with implications for the broader shale industry.

Global gas: catch methane if you can?

Scaling up natural gas is among the largest decarbonisation opportunities on the planet. But this requires minimising methane leaks. Exciting new technologies are emerging. This 23-page note ranks producers, positions for new policies and advocates developing more LNG. To seize the opportunity, we also identify 23 early-stage companies and 10 public companies in methane mitigation. Global gas demand should treble by 2050 and will not be derailed by methane leaks.


Pages 2-4 explain why methane matters for climate and for the scale up of natural gas. If 3.5% of methane is leaked, then natural gas is, debatably, no greener than coal.

Pages 5-8 quantify methane emissions and leaks across the global gas industry, including a granular breakdown of the US supply-chain, based on asset-by-asset data.

Page 9-10 outlines the incumbent methods for mitigating methane, plus our screen of 34 companies which have filed 150 recent patents for improved technologies.

Pages 11-13 cover the best new developments in drones and robotics for detecting methane emissions at small scale, including three particularly exciting companies.

Pages 14-15 outline next generation satellite technologies, which will provide a step-change in pinpointing global methane leaks and repairing them more quickly.

Pages 16-20 covers the changes underway in the oilfield supply chain, to prevent fugitive methane emissions, highlighting interesting companies and innovations.

Page 20-21 screens methane emissions across the different Energy Majors, and resultant CO2-intensities for different gas plays.

Pages 22-23 advocate new LNG developments, particularly small-scale LNG, which may provide an effective, market-based framework to mitigate most methane.

Shale growth: what if the Permian went CO2-neutral?

Shale growth has been slowing due to fears over the energy transition, as Permian upstream CO2 emissions reached a new high in 2019. We have disaggregated the CO2 across 14 causes. It could be eliminated by improved technologies and operations, making Permian production carbon neutral: uplifting NPVs by c$4-7/boe, re-attracting a vast wave of capital and growth. This 26-page note identifies the best opportunities.


Pages 2-5 show how fears over the energy transition have slowed down shale growth in 2019.

Pages 6-10 disaggregate the CO2 intensity of the Permian, by source and by operator, based on over a dozen models we have constructed.

Pages 11-15 argue why increased LNG development is the single greatest operational opportunity to reduce Permian CO2 intensity.

Pages 16-18 summarise advances in methane mitigation technologies and their impacts.

Pages 19-23 outline and quantify the best opportunities to lower CO2 from digital initiatives, renewables, lifting and logistics.

Pages 24-25 quantifies the sequestration potential from CO2-EOR, which could offset the remaining CO2 left after all the other initiatives above.

Our conclusion is to identify three top initiatives that companies and investors should favor. Industry leading companies are also suggested based on the patents and technical literature we have reviewed.

New Diverter Regimes for Dendritic Frac Geometries?

The key challenge for the US shale industry is to continue improving productivity per well, as illustrated repeatedly in our research. Hence, this short note reviews an advance in fracturing fluids, which has been patented by BP. Diverter compositions are optimised across successive pressurization cycles, to create dendritic fracture geometries, which will enhance stimulated rock volumes.


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Patent Leaders in Energy

Technology leadership is crucial in energy. It drives costs, returns and future resiliency. Hence, we have reviewed 3,000 recent patent filings, across the 25 largest energy companies, in order to quantify our “Top Ten” patent leaders in energy.


This 34-page note ranks the industry’s “Top 10 technology-leaders”: in upstream, offshore, deep-water, shale, LNG, gas-marketing, downstream, chemicals, digital and renewables.

For each topic, we profile the leading company, its edge and the proximity of the competition.

Companies covered by the analysis include Aramco, BP, Chevron, Conoco, Devon, Eni, EOG, Equinor, ExxonMobil, Occidental, Petrobras, Repsol, Shell, Suncor and TOTAL.


More information? Please do not hesitate to contact us, if you would like more information about accessing this document, or taking out a TSE subscription.

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.

CO2-EOR in shale: the holy grail?

What if there were a technology to sequester CO2, double shale productivity, earn 15-30% IRRs and it was on the cusp of commercialization? Promising momentum is building, at the nexus of decarbonised gas-power and Permian CO2-EOR…

First, this week, we finished reviewing 350 technical papers from the shale industry’s 2019 URTEC conference. The biggest YoY delta is that publications into EOR rose 2.3x. CO2-EOR is favored (chart below). Further insights from the technical literature will follow in a detailed publication, but importantly we do not see underlying productivity growth in shale to be slowing.

Second, we re-read Occidental Petroleum’s 2Q19 conference call. More vocally than ever before, Oxy hinted it could take the pure CO2 from decarbonised power plants and use it for Permian-EOR; with its equity interest in NetPower, 1.6M net Permian acres, and leading CO2-EOR technology. Quotes from the call are below:

  • On CO2-EOR: “We are investing in technologies that will not only lower our cost of CO2 for enhanced oil recovery in our Permian conventional reservoirs, but will also bring forward the application of CO2 enhanced oil recovery to shales across the Permian, D.J. and Powder River basins”
  • On decarbonised gas power: “What it does is, it takes natural gas combines that with oxygen and burns it together, and that’s what creates electricity and it creates that electricity at lower costs… one of our solutions is to put that in the Permian… for use in our enhanced oil recovery… It will utilize our gas that that if we sold it would make nearly as much”.
  • On the opportunity: “We are getting calls from all over the world, with people wanting our help to — figure out how to capture CO2 from industrial sources, and then what to do with it and oil reservoirs”.

Our extensive work on these themes includes two deep-dive reports linked above. Our underlying models can connect c10% IRRs on oxy-combustion gas plants (first chart below) with 15-30% IRRs at Permian CO2-EOR (second chart below). On these numbers, the overall NPV10 of an integrated system could surpass $10bn.

EOR remains one of the most exciting avenues to boost Permian production potential. So far, our shale forecasts assume little direct benefit (chart below). But an indirect benefit is implicit, as we assume 10% annualized productivity growth to 2025, which would underpin a very strong ramp-up (chart below). 2023-25 currently look well-supplied in our oil market model, due to falling decline rates, but this could be compounded by CO2-EOR.

We are more positive on the ascent of gas, stoked by increasing usage in decarbonised power. We see potential for gas demand to treble by 2050.

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) .

Shale EOR: Container Class

Will Shale-EOR add another leg of unconventional upside? The topic jumped into the ‘Top 10’ most researched shale themes last year, hence we have reviewed the opportunity in depth. Stranded in-basin gas will improve the economics to c20% IRRs (at $50 oil). Production per well can rise by 1.5-2x. The theme could add 2.5Mbpd to 2025 output.


Pages 3-5 review the theory of shale EOR. Its recovery factors could in principle surpass conventional EOR.

Pages 6-7 review lab results and field trials. They have been promising, suggesting >1.5-2x production uplifts should be attainable.

Pages 8-10 review the economics in detail. Our full model is informed by technical papers, and can be downloaded here.

Page 11 tabulates key statistics for using CO2 as a huff-n-puff injectant, the economic opportunities for carbon capture, but also the challenges.

Pages 12-13 attempt to quantify the production upside from shale EOR, by adapting our basin models.

Pages 14-15 cover the remaining challenges, including E&P patent-filing insights.

Page 16 lists a handful of companiesat the forefront of shale-EOR, including some earlier-stage start-ups.