2016 Deloitte Energy Conference: Unconventional oil and gas
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Unconventional Oil and Gas Andrew Slaughter, Moderator Executive Director Deloitte Center for Energy Solutions Deloitte LLP
Transcript of 2016 Deloitte Energy Conference: Unconventional oil and gas
Unconventional Oil and Gas
Andrew Slaughter, Moderator Executive Director
Deloitte Center for Energy Solutions
Deloitte LLP
Robert L. Kleinberg Schlumberger Fellow Emeritus
Schlumberger
Business Cycles & Innovation Cycles: Are They Related?
Schlumberger
Dimmit County, Texas
Greene County, Pennsylvania
Schlumberger is the actual provider of exploration, drilling and production services to the oil and gas industry. The views expressed herein are those of the author and do not necessarily represent those of Schlumberger.
“US shale resilience a product of innovation, CEOs say”
Oil & Gas Journal, March 2016
What Do We Mean by “Innovation”?
EIA Drilling Productivity Report, May 2016
Amazing Increase in the Productivity of Drilling Rigs
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50
100
150
200
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400
500
600
700
800
900
2014/Jan 2015/Jan 2016/Jan
Bakken R
ig C
ount
New
-Well O
il Pro
ductio
n p
er R
ig (b
bl/d
)
160601-02
One rig drilling for one month now adds 820 bbl/d
Costs Change During Stable Market Conditions
Increase Decrease
Play margin delineation Derisked geology
Drilling/completion/
stimulation surprises
More efficient drilling/
completion/stimulation
Competition for leases Consolidation of leases
Supply chain bottlenecks Supply chain optimization
Infrastructure bottlenecks Infrastructure buildout
Service cost increases
o Equipment shortages
o Personnel shortages
Service cost discounts
o Amortization of CAPEX
o Service efficiencies
o Increased competition
Early in development cycle
Late in development cycle
Process and Efficiency Improvements are
“Every Day Innovations” that Continue Through Business Cycles
Super Fracks
Longer laterals
Tighter fracture initiation points
More water
More proppant
Asset High Grading
No more exploratory drilling
Completing DUCs
Only the best rigs and crews
Ultra sweet spotting
What Do We Mean by “Innovation”?
How Do Industry-Changing Innovations
Develop Through Business Cycles?
3-D Seismic
Logging-While-Drilling & Geosteering
Rotary Steerable Drilling
Deepwater & Ultra Deepwater Technology
Horizontal Drilling + Massive Hydraulic Fracturing
http://www.nzpam.govt.nz/cms/iwi-communities/government-role/offshore-seismic-surveying
2-D vs. 3-D Seismic
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20
40
60
80
100
120
1960 1970 1980 1990 2000 2010 2020
BP
OIl P
rice (
2014$)
Year 160513-03
Exxon
Research
Large
Scale
Test
Commercial
Adoption
3-D Seismic
Waiting for Computing Power
Algorithm
Development
Gas Shale & Tight Oil
Greene County, Pennsylvania
Horizontal Wells and Hydraulic Fracturing Developed Separately
Multistage Fracturing Was the Key Enabler
EIA Wellhead Gas Price 1976-1996; Henry Hub Gas Price 1997-2016
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1976 1986 1996 2006 2016
EIA
Wellh
ead 1
976-1
996
EIA
Henry
Hub 1
997-2
016
($/M
MB
tu)
160531-01
Gas P
rice (
$/M
MB
tu)
Vertical Well Fracturing in Shale
Minimally Fractured
Horizontal Wells
Chalk Shale
Nat Gas Policy Act 1978
Sec 29 Tax Credit 1980
Multistage Fracturing
DOE Eastern Gas Shales Project
Primary Recovery
Lithostatic Pressure
Solution Gas Drive
Artificial Lift
Secondary
Recovery
Water
Flood Pressure
Maintenance
Water
Drive
Gas
Drive
Tertiary
Recovery
Steam Carbon
Dioxide Surfactant
Miscible
Solvent
Conventional Oil
Recovery Methods
The New Frontier: Tight Oil Recovery Factor
Primary Recovery
Lithostatic Pressure
Solution Gas Drive
Artificial Lift
Tight Oil
Recovery Methods
The New Frontier: Tight Oil Recovery Factor
Primary Recovery
Lithostatic Pressure
Solution Gas Drive
Artificial Lift
Reservoir Contact
Refracture In-Fill Drilling
Tertiary
Recovery
Gas Repressure Carbon Dioxide
Potential Tight Oil
Recovery Methods
The New Frontier: Tight Oil Recovery Factor
When Oil & Gas Prices are Rising & High
Industry R&D grows
Research prioritizes novel techniques
New people enter the field, generating fresh ideas.
Academic & government research driven by societal goals
o 1970s Petroleum & Synthetic Fuels
o 1980s Unconventional Gas
o 2010s Renewables
Innovation & the Business Cycle
When Oil & Gas Prices are Falling & Low
Industry R&D shrinks
o Technology leaders of the next up-cycle shrink the least
R&D prioritizes efficiency improvements
Technology development outsourced
o Downsizing of risk
o IOCs Service Cos Start Ups
Academic & government research winds downs
People exit the field
o Research is high-graded
o Survivors carry on
Innovation & the Business Cycle
Robert L. Kleinberg, Ph.D.
Unconventional Resources
Schlumberger-Doll Research
One Hampshire Street
Cambridge, MA 02139
617-768-2277
http://www.linkedin.com/pub/robert-kleinberg/19/177/131
Member of the National Academy of Engineering
Dimmit County, Texas
