Time For Shale Tech

By Luke Geiver | October 06, 2017

Following the record-setting rush for Permian acreage at the end of 2016 and the beginning of the year, there appears to be a new mood filtering throughout the vast shale energy industry.  A former exploration geologist that is now a portfolio manager for a major natural resources equity investor company helps explain the growing sense that many in the shale fields and boardrooms are starting to encounter. As the beginning section of the story, “The Time For New Tech In Shale,” highlights, shale players have a unique opportunity to tweak their typical mindsets.

In the past, the value and allure of an energy production company was linked to the value of its reserves and the possibility the company held for future growth. There was a time when the hit-rate on a new well was less than certain. But now, more than a decade into shale and the unconventional energy renaissance, the risk linked to geology and to the uncertainty of a shale well’s success is virtually nothing. With the geologic risk essentially gone and the basics of directional drilling, hydraulic fracturing and horizontal well production strategies understood by a high number of investors, the necessity for producers to spend capital, time and effort on swapping acres or acquiring new assets is less important—at least to some.

Because the risk and general operations of shale are now understood, some believe shale firms have an opportunity to focus more on developing what they have through operational efficiency gains and implementation of new or better technology as opposed to seeking new acreage. Opportunity exists for most operators to go into full development mode on the acres they have as if they were an industrial manufacturing firm and not a wildcat at heart. Doing so would allow investors to receive greater dividends from the shale firms they back. Of course, that is coming from the perspective of natural resources equity portfolio manager, so consider the source. However, it is clear that the risk of shale isn’t linked to the shale or tight formation itself anymore, but rather, the people, technology or strategies used to extract and manage all of the resources.

That is why this issue, we’re bringing you two unique stories on the role new technology can—or will—play in the Permian or Bakken or Eagle Ford or SCOOP/STACK. Both stories highlight the massive need and opportunity for new technology in shale—from the totally new (drones), to the seemingly unseen (downhole rod inserts or ultralightweight proppants). There has been a race for acreage and capital. Now, although each of those trends will continue--after all, this is the oil and gas industry--the possibility exists that the next trend will be about finding, implementing and succeeding with new and better technology.