In The Shale Oil Biz, Hope Springs Eternal




Here's what pundits say....


"So, if it isn’t in drilling, fracking and production, where’s the “boom” in all of this? My view is that we will see a boom focused on the following areas:

  • Efficiencies and technologies - As companies continue to see their recent focus on adoption of new technological solutions and focus on efficiencies in their operations result in improved financial results, they will be likely to double down on success.

  • Improved per-well results - This outcome will naturally flow from the adoption of better tech and creation of improved internal processes.

Stronger balance sheets - Obviously, better per-well results and higher commodity prices will result in better overall financials unless a company is simply mismanaged."

D. Blackmon, Forbes; March 8 2021

"Shale producers are getting more efficient and confident," says oil expert, Dan Yergin. IHS Markit; March 3,2021

Efficient Drilling

"Even as producers cut capital spending, they can keep output flat or slightly higher compared with last year. That’s because as oilfield service companies continue to get better at drilling and fracking, the explorers who hire them are getting more bang for their buck." Michael Tobin, Bloomberg; March 12, 2021

Feb 17, 2021,08:10pm EST|1,272 views Tech-Savvy Entrepreneurs Make Inroads Into Fracking Operations In Shale Oil And Gas.

Ian Palmer, PE, Forbes Magazine

Technology and portfolio high grading enables U.S. shale to defy early predictions

This happy circumstance is largely due to a couple of things primarily. The first is technology making the extraction of more oil per unit of interval than even just a few years ago. And, operator high grading of their portfolios to focus almost solely on Tier I acreage. Tier I acreage, as we have discussed in the past is the low cost, high return play that works particularly well in the Permian with its stacked reservoirs. David Messler, Oilprice.com; March 10, 2021

https://oilprice.com/Energy/Crude-Oil/Why-US-Shale-Production-Remains-Stubbornly-High.html

“We are still observing only about 50% of last year’s rig count activity,” EIA analyst Jozef Lieskovsky said by email. “With such a low rig count, 'even with the increased productivity,' production declines in all regions are possible.”


Here's What Actual Realized Production Data Says...



Once normalized for lateral length and proppant loading, shale oil wells across America's seven largest unconventional basins have not improved significantly, or at all, since 2016.


HFR Research and EIA; well productivity, all basins thru 2Q2019


More frac sand stuffed into longer laterals are designed for higher IP24 month, front end "loading" and initial cash flow. That model is clearly leading to greater decline rates post 36-42 months and does not appear to be resulting in higher ultimate recoveries. Remember, the 'E' in EUR stands for estimated. Wells are now designed to generate as much cash as possible as fast as possible, without much regard for ultimate recoveries. That, sadly, is yet another example of how this valuable natural resource is being grossly mismanaged for the long term and why regulators in charge, are failing our children's future.


Longer laterals and more frac sand all cost more money and have not improved well economics. This is clearly evidenced by the lack of consistent profit from quarter to quarter, the lack of acceptable returns to pissed off investors and why there has been little reduction in total long term shale oil debt. The first 'law' of oil economics has to do with higher well productivity NOT necessarily leading to greater profits. The shale oil sector seems to struggle with that concept.

Here is a chart for Permian Basin wells. Normalized for lateral length and productivity well performance is measured on a BOPD per 1000 foot of lateral basis. 2020 wells were clearly not as good as previous years wells. Below, data from a different outfit, same conclusion.

HFR Research, EIA data; Permian well productivity


In the Permian Basin, increases in well productivity plateaued in 2016.


In the Eagle Ford well productivity has declined, significantly, since 2016.


The only way a "journalist" could truthfully suggest technology and well efficiency has improved, or will improve well performance is on a BOE basis and that is because GOR in those seven basins, and total gas, is going thru the roof.


Charts are courtesy shaleprofile.com,, interpretations of those charts belong to oilystuffblog.com





Holy Schnikes look at the shale oil decline in 2019, above. That is from all US basins, real production data from state regulatory agencies, not hype. Yeow !!


So much for skiing down gentle, hyperbolic decline slopes. You now have to rappel down decline... cliffs.