Year in Review. Shale Play Recap. Where Are We in the Energy Transition by the #’s

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oil refinery for article about oil news

This year has been a banner year for energy, from the COP28 conference in Dubai to the ongoing global energy transitions. Throw in a few mega-mergers, and we’ve seen it all. This SHALE play year in review serves to recap the major news surrounding American Oil Shales.

Bakken Shale – North Dakota/Montana

In late 2023, Chevron purchased Hess Oil for S53 billion. This megamerger solidified Chevron’s position as a top producer in the Bakken shale in North Dakota and Montana. Although this massive deal has increased the output of the mountainous oil shale, overall production is still down 18% below the peak in 2019. This year, it produced 190,000 barrels of oil equivalent per day during the third quarter. 

After Chevron’s acquisition of Hess, the American oil titan plans to continue increasing output through 2025 to approximately 200,000 barrels of oil equivalent per day. Chevron hopes that the historically higher-cost drilling region in the Bakken Formation will reduce over time as this technology develops. 

Denver/Julesburg (DJ) Basin – Colorado

The Denver Julesburg basin Saul another year of consolidation in 2023. In addition to the mounting challenges of oil production due to the focus on energy transition, the Colorado House of Representatives introduced a bill to limit freshwater use in Colorado oil and gas operations to a maximum of 25% total water. This bill severely hampers drilling efforts, making production in the DJ basin more costly and less enticing. 

Additionally, Colorado Governor Jared Polis demanded oil and gas Industries cut ozone pollution by 30% by 2025 and 50% by 2050. Analytics estimate less than three years’ worth of sub-$50 breakeven wells remain in the basin. 

Permian Basin – Texas/New Mexico

Colorado-based Ovintiv reached a deal with EnCap Investments to expand its reach in the Permian basin. This deal means Ovintive will exit the Bakken Shale Play in North Dakota. Brokering this move represents a massive migration from the North Dakota basin to the expansive prospects of the Texas/New Mexico basin. 

Eagle Ford Shale – Texas

While the overall production in the Eagle Ford Shale is up from last year, the last few months have seen a slight decline in production. Although no significant mergers or moves took place in the Eagle Ford Shale of Texas, output in the month of December is up 7.62% from 1 year ago. 

Marcellus/Utica Shale – Pennsylvania/West Virginia/Ohio

The Appalachian region saw a boom in natural gas production in early 2023. The EIA reports a nearly 100% utility capacity for 2023 for the mega basin. This surge in natural gas production represents a major economic stimulation for the Appalachian area. 

Despite the early production boom, gas production is projected to decline from 35.345 billion cubic feet a day in July to 35.329 billion cubic feet per day during August. According to the EIA, oil production is expected to remain flat at approximately 147,000 barrels per day. 

SCOOP/STACK Play – Oklahoma

Oklahoma had higher oil production rates in 2023 than the previous year. Ovintiv plans to expand its drilling projects in the SCOO/STACK play, planning to invest approximately $190 million to $210 million in the coming quarter. According to Oklahoma Energy Today, the Denver-based Oil Company plans to bring 26 net wells in the Anadarko basin. 

Ovintiv has made significant moves this year in the SCOOP/STACK play and their other drilling locations in western Canada and Utah, making it a banner investment year all around. 

Haynesville/Bossier Play – Louisiana/East Texas

Unfortunately, the Haynesville/Bossier play was marked by tragedy in late 2023 with an oil spill that leaked nearly 1 million gallons of crude oil into the coastal waters of Louisiana. The spill was officially titled the “MPOG11015 Incident.” The oil disaster is not the first of its kind in the region. In 2010, Deepwater Horizon leaked a staggering 130 million gallons of crude oil into the Gulf of Mexico. Before that, a hurricane demolished a Taylor Energy platform, causing oil to spew from several broken wells. 

Workers are frantically moving to secure and recover the lost oil to protect the Gulf of Mexico and wildlife in the surrounding area. While multiple pipelines are in the region, making it difficult to pinpoint a specific culprit, the Main Pass pipeline is the suspected source of the league.

The Energy Transition in a Nutshell

2023 has seen rapid growth in the energy transition. Climate leaders call for vigilant determination and an increase in energy transition tactics as the planet moves towards a lower-emission environment. In an effort to lessen the impact of climate change, world leaders and energy investors are doubling down on the goals set by the Paris Agreement in 2015. 

At the COP21 event in 2015, world leaders agreed to make efforts to limit the rise in global temperature to 1.5° Celsius by 2030. Climate leaders say we must move away from emission-heavy energy sources and look to alternative forms of energy, like renewable resources, to make this ambitious goal possible. 

This year alone, the energy transition has been advanced by leaps and bounds. 

COP28

The annual climate conference began in late 2023 and is on track to be a historic event for climate leaders, energy investors, and the fossil fuel Industries. According to CNBC, many leaders enter the conference with the expectation of reaching an agreement to phase out fossil fuel energy resources entirely. 

While fossil fuels have always been at the heart of the climate summit, talk of a total cessation of fossil fuel utilization would have an unfathomable impact on the global economy. Still, as the conference unfolds, the world will watch and see what comes from the critical conference. 

The WRI Says We’re Not Moving Fast Enough 

In an energy transition report published by the World Resources Institute (WRI), the current climate efforts are nowhere near where they need to be to meet the 2030 emissions goal. The report indicates that efforts are falling short across the board, particularly in the areas of fossil fuels. 

The coal industry has been singled out among fossil fuels, with the WRI suggesting we must phase out coal seven times faster than the current rate. The report paints a bleak picture for the energy transition, indicating upwards of 240 coal-fired power plants must be shut down annually to meet the goal set by the Paris Agreement.

Naturally, this dark outlook was far from the report many were hoping for, given the advances in renewable power-generation technology and alternative energy forms. 

Alternative Energy Highlights for 2023

The planet saw unprecedented renewable energy and alternative power sources growth in 2023. International Energy Agency (IEA) estimates renewable capacity additions increased by 107 GW this year. This massive expansion represents an enormous increase and a never-before-seen growth in renewable energy infrastructure production. 

Expanding renewable energy infrastructure holds promise for a stabilized power supply as the world transitions to alternative forms of energy. Here are some of the highlights of renewable power and alternative energy sources:

Solar 

Solar PV power makes up the majority of the increase in renewable energy, comprising two-thirds of this year’s increase. While the global energy crisis caused soaring prices and extreme cost increases, solar power came in handy to alleviate energy consumption around the world. Europe and China notably invested monumental amounts of land and funding to construct massive solar power plants. 

Residential solar panels also saw a surge in installation in 2023, with an increase of nearly 52% from the previous year in the U/S/ alone. 

Wind 

Although offshore wind has been on the decline for the past two years, the IEA estimates it will increase by nearly 70% in 2023, an all-time record amount. The United States and Europe both made great strides in wind production and are on track to continue to increase the power generated by wind farms in 2024. 

Hydropower

Unfortunately, Hydroelectric power generation saw an estimated 1.8% decrease in 2023. The decline in hydropower generation is primarily due to the sweeping droughts experienced in many parts of the world, like China and the United States. However, the drop in hydroelectric power is assumed to be temporary, without long-term ramifications. 

Nuclear

Nuclear power had its devastating year, with five global power plants being permanently shut down. Three of the five plant retirements were in Germany, following their vow to terminate nuclear power. 

However, despite shutdowns and negative associations, nuclear power supplied approximately 10% of the world’s electricity. According to the World Nuclear Association, nuclear power is the world’s second-largest low-carbon power source, making it worth noting in the transition to clean energy. 

Review the Facts with SHALE

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