Is shale a Ponzi scheme, improperly capitalized, or is it a little from Column A and a little from column B?  Much of this comes down to the reservoir engineering: recovery factors, drove mechanisms, oil and gas in place. One of the critics of the overvaluation in the early days was Scott Lapierre, who joins me this week to talk about what what wrong, how do we know, and how do we fix it. Even if you aren’t a reservoir engineer, we boil it down to the key elements using props and analogies so think of it as a reservoir engineering teach-in with the objective: “is this thing on??” I hope you enjoy.

#hottakeoftheday Episode 66 w/Scott Lapierre

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Controversial Theory Proven Valid as ‘Bubble-Point Death’ Rages across Midland Basin Despite Three Years of Industry Denial

About Scott

Shale Specialists was founded by Scott Lapierre in June of 2016 with the goal of offering his impactful, extensively integrated across disciplines, and proven innovations in shale reservoir characterization to the industry at large.

After graduating in 1995 with a Bachelor of Science in geology from the University of South Alabama, Scott began his oil industry career in operations as a formation evaluation field engineer assigned in the GOM deepwater and shelf. In 2005 Scott transitioned from data acquisition to data interpretation by joining ConocoPhillips as a petrophysicist in their Subsurface Technology group.

As the Shale Resource Revolution exploded onto the scene in 2007, Scott had been testing and developing shale-specific log interpretation and core measurement techniques to extract critical information that could be used to gain a technical exploration advantage in prospecting for shales.

In 2009 Scott joined Pioneer Natural Resources to help them explore for opportunities to produce liquids from shales. From 2009 to 2012, Scott leveraged global access to log and core data to further develop and test log interpretation, core processing, and mapping techniques to precisely determine hydrocarbon concentrations from legacy data to support competitive exploration. His pioneering integration of geochemistry with petrophysical interpretation enabled the use of original oil-in-place (OOIP) as a primary tool for exploration and development.

By 2013, Scott had shifted focus toward follow-up review of maturing prospects heavily steered toward using his OOIP work products. In trying to understand why two shales with nearly identical hydrocarbon quantities, mineralogies and reservoir pressures would recover dramatically different oil and gas quantities he discovered but one explanation capable of explaining all such observations.

If he modeled the primary source of mechanical energy driving oil production to the surface as being dominated by oil-phase expansion, all observed variations could be explained. In essence, Scott had discovered that the industry-wide assumption that reservoir drive energy was dominated by solution gas expansion, a conventionally gracious reservoir drive mechanism (i.e. capable of high recovery efficiency), was incorrect.

Such a discovery bore good news and bad news. The good news was that recovery factor need no longer be relegated to a reactive, after-the-fact sanity check of the reasonability of forecasts. Instead, recovery factor could now be proactively predetermined independent of any production or knowledge of hydrocarbon concentration. The bad news? When recovery factor was combined with OOIP to compute Recoverable Oil-in-Place, there would instantly be unambiguous upper limits to total oil recovery that would restrict the number of drillable locations and ultimate well recoveries.

Unable to gain much traction with his discovery, Scott set out to test his idea by creating a startup E&P company. He co-raised $100 million in private equity from Natural Gas Partners and co-founded PCORE Exploration and Production LLC to exploit the competitive advantage pre-knowledge of Recoverable Oil-in-Place could provide.

PCORE was successful in mapping, leasing, drilling, completing and divesting what would become the “core” of the Midland Basin. Despite oil falling precipitously from $105 to $36 per barrel during their run, top-tier performance of their initial three wells demonstrated the outstanding potential of their position and led to a marque transaction that generated substantial return to their capital providers.

Since the close of PCORE E&P, Shale Specialists LLC has been providing investors, public and private operators, and private equity companies integrated evaluations of reservoir potential and valuations across the North American shale industry.