ADI Analytics - Innovation in Unconventional Oil & Gas
Transcript of ADI Analytics - Innovation in Unconventional Oil & Gas
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Innovation in Unconventional Oil / Gas
Shale Gas Innovation ContestMay 2014
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ADI Analytics is a boutique consulting firm serving energyand chemical companies with passion, rigor, and expertise
OperationsMarkets FunctionsTechnology
Oil &Gas
ProductionExploration Refining Distribution
Renewables &Cleantech
GeothermalBiomass WindSolar
Chemical &Industrial
Plastics Materials Manufacturing Auto
Power &Mining
Coal Generation CarbonTransmission
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Fortune 500 and mid-sized companies, start-ups, investors,and governments have hired us to shape decisions globally
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North American shale gas was a small business revolutionand not led by big oil
Experience and Capability in Unconventionals
Acquirers /Late Entrants
FastFollowers
Pioneers
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Technology and innovation have been critical to theincreasingly quicker development of new plays and basins
Months to One Billion Cubic Feet Per Day in Gas Production
125
80
5448 45
40
1612
Jonah Pinedale Barnett Montney Fayetteville Eagle Ford Marcellus HaynesvilleSource: Baker Hughes; ADI Analytics Research
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More significantly, it is addressing the recovery and depletionissues making the shale gas revolution more sustainable
Gas Production Per Horizontal Well(Thousand Cubic Feet Per Day)
0
1,000
2,000
3,000
4,000
0 10 20 30
2007
2008
2009
2010
2011
Time in MonthsSource: Baker Hughes; ADI Analytics Research
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This is coming through smarter e.g., intelligent exploration and harder e.g., higher stage / lateral intensity running
Stages Per Well(Estimates, Number)
45
6 6 6
4
7
8
10
14
2007 2008 2009 2010 2011
Average Lateral Lengths(Estimates, Feet)
2,900 3,000
3,750
4,2004,400
2007 2008 2009 2010 2011Source: Baker Hughes; ADI Analytics Research
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2006 2007 2008 2009 2010 2011
Collectively, new technologies, practices, and innovation isbehind the learning curve that we see across the U.S. and
Source: ADI Analytics Research
Pad drillingMulti-lateralsMultiple fracsMore stagesProppant optim.
Average F&D Cost Reductions in U.S. Shale Gas
(Weighted across top 10 operators in 5 basins, U.S. $/MM Btu)
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2005 2006 2007 2008 2009 2010 2011
Barnett(F&D cost in U.S. $/MM Btu)
Haynesville / Bossier(F&D cost in U.S. $/MM Btu)
Marcellus(F&D cost in U.S. $/MM Btu)
Fayetteville(F&D cost in U.S. $/MM Btu)
Across all the major basins
Source: ADI Analytics Benchmarking Service, 2013
2005 2006 2007 2008 2009 2010 2011
2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011
-9%-22%
-27%
-15%
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Fracture effectiveness continues to be a challenge
Share of Low-Performing Fractures(Fractures contributing 1-5% of production)
Key Issues
Growing realization that production percluster of fractures is not uniform inshale gas reservoirs
Nearly 30% - 50% of fractures contribute
less than 1% to 5% of gas production
30%
43%
50%
Schlumberger Schlumberger Expert
Technology Needs
Better fracture imaging and siting, e.g.,
with cheaper micro-seismic, alternativediagnostic tools such as ultrasound, andbetter data interpretation
Advanced proppants and optimizedproppant delivery mechanisms
Sources: A. Gatti, Schlumberger, December 2010; ADI Analytics Research
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Flaring is a significant challenge but addressing it isbecoming very important
Note: Approximate estimates based on averages. Volume of gas not marketed is considered as flared.Sources: North Dakota Industrial Commission
Avg . Gas Flared / Sold by Well(Thousand Cubic Feet Per Day)
0
500
1,000
1,500
2,000
2,500
0 200 400 600 800 1000
34
5259 57
76
26
22
2538
41
60
74
84
95
117
2008 2009 2010 2011 2012
Sold
Flared
Bakken Flaring Rates by Well and (Thousand Cubic Feet Per Day)
Average for 2011using this data set is
54 Mcf/well
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New fuel and vehicular technology adoption is notoriouslyslow and natural gas in transportation will be no different
Years to Achieve 25% Market Share
Gas Oil Diesel-firedocean ships
Diesellocomotives
Source: Vaclav Smil; ACT Research; Argonne National Laboratory; Encana; National Petroleum Council; ADI Analytics Research
Diesel-fired class 8trucks (estimate)
Natural gas-firedrefuse trucks
Years to Achieve 25% of New Sales
Fuel changes have beenquicker but still take at least 10
years for meaningful shares
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14511 Old Katy RoadSuite 374
Houston, Texas 77079
mailto:[email protected]://www.adi-analytics.com/http://www.adi-analytics.com/mailto:[email protected]