As unconventional developments spread globally, a debate is emerging in the US over whether the shale business has reached its zenith. The issue took center stage during the plenary session of the most recent Unconventional Resources Technology Conference (URTeC), held in Houston this week from 22 to 24 June.
A familiar voice at the industry gathering was Bob Brackett, managing director and senior research analyst covering the North American oil and gas sector at financial advisory firm AllianceBernstein.
Brackett, who has headlined several recent conference openings, used his time to deliver a performance review of the US shale business that he has followed closely since inception. He recalled attending the first URTeC in 2013 and underlined the scale of growth since then. Following that first edition of URTeC, he said the US shale sector has added about 10 million B/D of oil production. Including natural gas, that increase rises to about 30 million BOE/D.
“Over the period of time in which we even cared enough about a technology sector to host conferences on it, we've added the equivalent of a Russian oil industry, a Russian gas industry, and most of the Middle East gas industry—and that's just the US,” he said.
He noted that the global impact of the shale business expands even further when Canada, Argentina, the Middle East, and China are included.
Brackett also highlighted how capital efficiency has improved. Using the Delaware Basin as an example, he showed that in 2013 the average horizontal well generated about 100,000 bbl cumulatively over its first 5 years, delivering around $10 million in revenue over that period.
However, the early wells in what is now the most prolific play in the US also tended to cost more than $10 million to drill and complete.
“Those were science experiments; those were technology experiments. They were not making money,” he said. This is despite oil prices being nearly $100/bbl at the time.
Today, many top-tier Delaware wells are producing 300,000 bbl in about 2 years at prices closer to $80/bbl. He said the improvements that were years in the making moved the US from being the world’s “marginal” supplier to one of its more economic sources.
Brackett, speaking from an investor perspective, said this transformation has driven a sharp increase in financial returns. US shale operators have gone from generating “trivial” free cash flow to “surging” levels.
Despite representing only about 4% of the largest US companies by market capitalization, shale producers now account for 9 of the top 31 firms in terms of free cash flow.
Plateauing Productivity and the Recovery Challenge
On the downside, Brackett said that US shale productivity appears to have peaked around 2021. Longer laterals and new development strategies have kept normalized per-well output relatively flat and are not delivering significant gains.
The real challenge he sees facing the industry comes down to the recovery factors that have barely budged, if at all, since the sector was born.
“The biggest issue that it feels like we are right on the edge of solving is why are these recovery rates so poor. Why does primary recovery extract perhaps less than 10% of the original oil in place?”
In addition to improving recovery, he suggested the industry look for ways to monetize CO2, electricity, and other subsurface resources that are currently underutilized.
The Need for a ‘Next Chapter’
Birlie Bourgeois, the director of applied technology for Chevron’s unconventional business, cast shale as “the hero” of the world’s energy story. “It’s the rock, it’s the people who turned it into a major source of energy security and economic growth,” he said.
At the same time, he cautioned that the current model is approaching its limits. Global energy demand is expected to rise for decades, and hydrocarbons will remain a key component. But the trajectory of unconventionals is now being tested, and a breakthrough may be what’s needed most.
“We’re at a point now that we need more than just incremental improvement to sustain the journey, to fulfill that economic need for the future; and like every great story, we need a next chapter,” said Bourgeois.
The shale executive added that earlier gains came from relatively straightforward levers such as increasing proppant intensity and improving surface ops efficiency. Achieving another step change—such as another 10% in recovery—will require far bigger advances.
For Chevron, the strategy to accomplish that comes down to three ideas.
The first is to leverage data and artificial intelligence to make better designs and find yet more efficiencies that will reduce well-cycle times. The second goal involves making big improvements on the fractures themselves to contact more of the reservoir. The final component leans on expanding enhanced oil recovery (EOR) across the asset base.
On EOR, Bourgeois said Chevron has applied its proprietary surfactants across about 600 wells, both legacy and recently completed. But the company has thousands more in the ground that could benefit.
“We’ve seen up to 20% improvement in early-time productivity in our new wells, and we’ve stemmed the decline of base wells by 5 to 8%, so we’re extending the runway of our assets,” he said.
Imagine First, Then Innovate
Bob Fryklund, vice president and chief strategist for the upstream energy group at S&P Global Energy, offered a generally upbeat outlook for US shale while acknowledging clear challenges.
He acknowledged that US shale is aging, and like all maturing assets, the central question is “how do we do more with less,” arguing there are only two options. The industry must increase volumes or improve recovery.
This is, of course, far easier said than done. S&P’s data show that for every billion dollars invested in US shale, productivity has declined in recent years. “That is one of our biggest challenges as we go forward,” he said. “How do we deal with that diminishing rate of return? What is it that we can do?”
Time and again, the industry’s answer is technology.
Fryklund is counting on technology, too, and pointed to electrification as a potential driver of lower costs and cited earlier advances as indicators of what is possible, including horseshoe wells, longer laterals, water recycling, automation, and the growing use of surfactants.
He said the biggest limiter to innovation is simply “imagination” and that creative organizations are the ones that come up with breakthrough innovations that others can follow.
“But we are still way below where we should be,” in terms of recovery, he said, adding later that “it all gets down to really trying to solve a problem, trying to also make those naysayers eat their words because we’ve been counted out many times. You hear a lot about now that we’re at the peak, we’re running out of inventory. I don’t believe it, and you shouldn’t either.”
Abu Dhabi Rising
Among the places where it cannot be argued that shale is peaking is the desert sands of the UAE where the Abu Dhabi National Oil Company (ADNOC) is just gearing up.
Khalid Al Kindi, senior vice president of drilling and well services for ADNOC Onshore, outlined the company’s progress in unconventionals at URTeC.
“Ten years ago, we had no [unconventional] program, no supply chain, no pipe, no playbook,” he said. “We had a discovery, a strategy, and a determination to turn Abu Dhabi into the next frontier for unconventional development.”
ADNOC now estimates its unconventional resources at 22 billion bbl of recoverable oil and 160 Tcf of gas. The company has drilled more than 130 shale wells and is targeting 300 MMscf/D of gas production by July, followed by 125,000 B/D of oil by 2027.
Repeatable Performance, Challenges Remain
Al Kindi emphasized the importance of what he termed “repeatable performance” across ADNOC’s drilling and completions.
Drilling times have fallen from 46 days to about 13 days. Current lateral sections extend to around 10,000 ft, but ADNOC plans to soon reach 15,000 ft and eventually 20,000 ft.
Completion operations now involve pumping 12 to 16 million lb of proppant and roughly 12 million bbl of water per well, which requires about 120 trucks to haul the water in. The company is also able to complete an average of nine stages per day, doubling its initial completion speed.
As a result of its recent improvements, completion costs are down by about half, and new gas wells are delivering initial production rates of 10 MMscf/D, about five times higher than the first wells.
“These gains come from integrated planning, batch drilling, geosteering discipline, and data-based frac designs,” he said, all of which are the result of a new development model that comes from Turnwell Industries, a joint venture with SLB and Patterson-UTI formed in 2024.
That said, Al Kindi did not pretend that ADNOC has solved everything in its unconventional program. He said the company faces a few key challenges. The first is “changing the conventional mindset as we introduce factory model operations into an organization built around a totally different type of field.”
Other issues include geological uncertainty, real-time decision-making, and managing the cost of data acquisition and subsurface evaluation. The latter reflects a tension between accelerating learning and avoiding the expensive trial-and-error phase that defined early US shale development.
