Shale 2.0: From Efficient to Effective Shale Development

Abstract

Guest editorial Hydrocarbons from shale were first produced commercially as long ago as 1821, and from the 1860s through the 1920s gas was produced from shallow, low-pressure, naturally fractured shales in the eastern US. However, today’s shale “revolution” did not really begin until 1985. That was when George Mitchell started developing a model for economically viable exploitation of the Barnett Shale. It took almost 20 years and literally hundreds of wells to find the right formula, based on two transformative technologies: horizontal drilling and multistage hydraulic fracturing. Shale 1.0: The Quest for Operational Efficiency Since roughly 2005—the beginning of what I call Shale 1.0—we have successfully revived old shale plays and developed new ones. Every year, North American companies complete thousands of wells in shale reservoirs. However, even in mature plays like the Barnett, where productivity per well has doubled or tripled over the past decade, as many as 30% of all perforation clusters contribute absolutely nothing to production. That is the same as drilling 30 totally nonproductive wells out of every 100. To improve shale economics, operators and oilfield service companies have focused considerable brainpower and technical resources on reducing the unit cost of production through greater operational efficiency. In many cases, we have brought drilling and completion costs down 50%, largely through application of new technologies, efficient project management, and supply chain negotiations. In some cases, advanced drilling technologies, automation, and real-time data have slashed average time to total depth from 48 days to just 8. Not all new technologies are exotic. For example, installation of rupture disk valves—which replace coiled tubing or drillpipe-conveyed perforations for the first stage in horizontal wells—reduced completion costs in 15 Eagle Ford wells by more than USD 100,000 per well. The shale revolution has yielded many economic and social benefits, including growth in jobs and local businesses across the US, lower domestic energy costs, reduced CO2 emissions, and—perhaps most important—access to a new national resource that holds enormous potential for long-term energy security. According to the Institute for Energy Research, the US has more than 200 years’ capacity of technically recoverable oil reserves and 110 years’ worth of natural gas at current rates of consumption, much of those from unconventional plays. In fact, shale oil is leading the current growth in US crude production. The US Energy Information Administration conservatively predicts global shale oil production will reach more than 4 million BOPD by 2030. Other analysts double that estimate.