Wet and Dry Shales — Today and 2020

Abstract

Is the stage set for U.S. operators to drill themselves into lower domestic oil prices, similar to what they did with gas? Investment in shale plays across North America has undoubtedly shifted from the early gas targets in the Barnett, Fayetteville, and Woodford to liquids-rich zones and oil producing formations like the Bakken, Eagle Ford, and Wolfcamp. At the peak of the gas boom, a little more than 75% of activity was targeting gas plays. Now, over 75% of industry activity targets oil plays. The shift has been driven by strong liquids prices and, most importantly, technology improvements that allow tight oil plays to provide sector-leading returns. US onshore operators realize rates of return as high as 30% in tight oil assets, or roughly double what they experienced in shale gas plays. Liquids-rich shales also provide as much upside as many new deepwater and ultra-deepwater projects. Exploration dollars that were once being invested abroad are coming onshore now as operators push the limits of downspacing and look to prove the viability of secondary targets or stacked pay zones. Both downspacing and stacked pay have the potential to multiply the resource prize and extend the life of the biggest unconventional fields. Total investment in tight oil plays in the US is approaching US$100 billion per year, a similar amount to what the entire upstream industry invested in the US just a few short years ago. Operators in the top tier assets are focused on enhancing completions and streamlining operations. Using our proprietary well analysis tool and coverage of over 100 companies in 300 Lower 48 plays and sub-plays, we have benchmarked the best acreage across all resource types; gas, rich gas, and oil. Looking forward, we have also evaluated the variability in performance across plays, the emergence of secondary or stacked pay in the major producing areas, and changing drilling and completion strategies. We characterise how much those factors could further shift the industry over the next five years. Will drilling inventories dry up or will there still be room to run in 2020?

AAPG Datapages/Search and Discovery Article #90216 ©2015 AAPG Annual Convention and Exhibition, Denver, CO., May 31 - June 3, 2015