In 2018, Shale Is Undersupplied

A familiar thread is once again weaving through the stories, conversations and descriptions of the current shale space. We’ve experienced it before.
By Luke Geiver | February 05, 2018

A familiar thread is once again weaving through the stories, conversations and descriptions of the current shale space. We’ve experienced it before, back when oil prices were above $90/b and reaching total depth on a horizontal well took a month or more. As you’ll find this issue there is a thread of excitement in the unconventional world right now, an understanding that much of what drives activity levels is undersupplied: sand, midstream infrastructure, workers and depending on which source you subscribe to, global oil inventories.

Midway through 2017, it became clear that gathering, takeaway and long-haul shipping capacity in every major shale play was becoming a concern. The supply of infrastructure and services was falling behind demands from the production side. In the fourth quarter of 2017, we ran numerous stories detailing a new midstream project, joint-venture, gathering plan or pipeline open season calls. When it became time to quantify and explain the issues with midstream capacity in places like the Permian, Bakken or DJ Basin for this issue, we had a long list of headlines to add into the greater story as examples of how producers and shale midstream entities view the supply and demand needs of the industry. In the feature, “Shale’s Need For Midstream” on page 22, we included more than 10 examples of new midstream-related projects. And, since we finished that piece, the list could have expanded. Sentiment from some of the midstream groups in the feature explain why, or how long, the trend will continue.

It’s possible that one of the most important trends to spread throughout shale this year is a new investor and operator mantra towards initial production rates. For months, we’ve heard and written about rumblings from the investor (and E&P) side that the goal in the future should be centered on long-term development. Such an approach could make initial production rates less important, and, in some cases, allow E&Ps to focus more on investor share buybacks and payouts. Patrick C. Miller spoke with every side of that story, including an operator, analysts and others, for his feature this month.

From the news and trends section of this issue, it is also clear to see that 2018 will harbor growth. From frack sand suppliers continuing their ramp-up, to more rigs headed to the Bakken, the North American shale scene is moving beyond active and, instead, closer to a word we all know is the exact opposite of a bust.

As part of the industry, our team is ready for the new year and heightened activity levels. We are excited to announce that in 2018, we’ll be publishing more issues and we will soon be announcing more content offerings for you to learn from or utilize as a powerful messaging and advertising platform.