Deloitte: Optimizing Shale Well Designs Could Boost Eagle Ford and Permian Economics by 19-23%
HOUSTON, Oct. 23, 2019 /PRNewswire/ -- New findings from Deloitte’s ” Deciphering the performance puzzle in shales: Moving the shale revolution forward ” research series suggests that if Eagle Ford and Permian Basin shale operators were to fully optimize their well designs, they could generate capital efficiency gains of 19% and 23%, respectively. This could represent a $24 billion capex saving opportunity for U.S. shale operators to strengthen their balance sheets and boost returns.
“When it comes to efficiency gains, the industry seems presently divided on the outlook for shale wells. Some say gains have peaked, but Deloitte’s deepest foray into well-level data analytics revealed actionable insights which can help improve industry performance at a time when both investor sentiment and commodity prices are low,” said John England, partner, oil, gas and chemicals, Deloitte & Touche LLP. “The findings clearly show that a one-size-fits-all approach to well design and completions is wasteful, and that it’s time for the industry to choose the right well design, not the biggest, to maximize efficiencies and profitability.”
Key findings from the analysis include:
Sustaining shale efficiency gains and building resiliency
Optimizing well designs is an important priority, but the industry shouldn’t stop there, Deloitte notes. To make truly sustainable improvements and build resiliency against future price cycles, operators should work with all stakeholders in the oil and gas ecosystem. For example, E&Ps should co-share the productivity benefits with oilfield service companies, and design new win-win contractual arrangements with infrastructure providers.
Importantly, E&Ps should also win back investors’ trust through more consistent transparency and reporting details of performance. Companies should standardize how they report well results and look to third parties to help. Large institutional investors, energy agencies, and shale industry associations along with data aggregators could play a big role in standardizing performance benchmarks for the shale industry and its investors.
“Even though we’re over 10 years into the shale era, the industry is actually in the early stages of understanding. As with any new resource, the early phase of growth is also the initial phase of evolution and experimentation,” said Scott Sanderson, principal, Deloitte LLP’s oil and gas strategy and operations practice. “Now we are more aware of the challenges facing the viability of shales, and ‘brute force’ is not necessarily the answer. E&Ps should use analytic insights like this to course-correct both operational tasks and commercial arrangements to bring sustainable benefits to shareholders and the extended oil and gas ecosystem.”
Connect with us on Twitter: @Deloitte4Energy, @JohnWEngland.
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