Enhance Decision-Making in the Development of Shale Resources

Abstract

The unique geological characteristics of shale resources result in development plans that require the exploitation of large resource areas, a manufacturing approach to drilling operations that allow for the efficient execution of many similar type wells, and a very long drilling time horizon to fully extract the resources. Understanding the difference between conventional and unconventional resources and sub-surface and surface factors is critical to driving capital efficiency, maximizing revenues and generating positive cash flows for unconventional resources. Capital efficiency starts with strategy and requires agility and foresight to pursue, abandon or defer capital projects. This is important to companies who are chasing margin over revenue in the current market. Furthermore, capital efficiency is needed throughout the asset lifecycle from strategy to execution. Benchmarking developments against an expected standard framework can help determine blind spots where value could be captured and achieve the most benefit. The presentation shows impacts of different competing factors on capital efficiency in development of a shale resources. The presentation will cover: • Shale play resources maturation due to its unique geological characteristics • Impact of key sub-surface and surface factors on project economics required to be considered in development decisions This paper will also show how the above are modeled in an Excel spreadsheet tool to aid decision making for a hypothetical shale play development. Our experience shows that this tool enhances decision making for shale development and also capital allocation. From a capital allocation perspective, capital efficiency requires a clear investment strategy; optimizing a portfolio and projects to align with that strategy; developing internal processes, procedures, and, most important, the skills and capabilities to execute; establishing how value is measured and enabling technology enhancements within the organization’s capabilities and risk appetite.

AAPG Datapages/Search and Discovery Article #90350 © 2019 AAPG Annual Convention and Exhibition, San Antonio, Texas, May 19-22, 2019