Optimization, co-sharing could boost shale economics

New findings from Deloitte's "Deciphering the performance puzzle in shales: Moving the shale revolution forward" research series suggest if Eagle Ford and Permian Basin shale operators fully optimize their well designs, they could generate capital efficiency gains of 19 percent and 23 percent, respectively. This could represent a $24 billion capex savings opportunity for U.S. shale operators to strengthen their balance sheets and boost returns.

"When it comes to efficiency gains ⦠data analytics revealed actionable insights that can help improve industry performance," said John England, partner, oil, gas and chemicals, Deloitte & Touche LLP.

Optimizing well designs is an important priority, but industry shouldn't stop there, Deloitte noted. To make truly sustainable improvements and build resiliency against future price cycles, operators should work with all stakeholders in the oil and gas marketplace -- for example, co-sharing productivity benefits with service companies and designing new win-win contractual arrangements with infrastructure providers. Large institutional investors, energy agencies and shale industry associations, along with data aggregators, could play a big role in standardizing performance benchmarks for the shale industry and its investors.

"Even though we're over 10 years into the shale era, the industry is actually in the early stages of understanding. As with any new resource, the early phase of growth is also the initial phase of evolution and experimentation," said Scott Sanderson, principal, Deloitte's oil and gas strategy and operations practice. "Analytic insights like this [can] course-correct both operational tasks and commercial arrangements to bring sustainable benefits to shareholders and the extended oil and gas ecosystem."

For more information, visit www.deloitte.com or call (713) 982-3108.