Unconventional - Consulting

IHS Unconventional Solutions

From play characterization and resource assessment, to due diligence and market analysis, IHS has the consulting expertise you can rely on throughout the entire unconventional value chain. Our analysts assess below- and above-ground risk to support your search for optimization and down market unconventional opportunities.

IHS consulting professionals can help your organization assess hydrocarbon potential and market opportunities in the most effective, efficient and sustainable manner. View the many examples below and see how IHS consultants deliver an integrated service to support organizations across the entire unconventional value chain.

Play Characterization and Resource Assessment

A multi-disciplinary team provides answers to below ground play level recoverable resource opportunities, production forecasts and reservoir performance assessments.

Analyzing the Performance of North American Shale and Tight Sand Plays

A major operator in several US and Canadian unconventional plays that wanted to expand into additional unconventional plays needed help identifying all major plays, sub-plays and sweet spots and comparing and contrasting their...
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Challenge
A major operator in several US and Canadian unconventional plays that wanted to expand into additional unconventional plays needed help identifying all major plays, sub-plays and sweet spots and comparing and contrasting their performance. This analysis would provide a starting point for developing analogues that could be used to evaluate new plays.

Solution
IHS identified 200 mature and emerging unconventional plays and included all wells pertaining to these plays in the analysis. Using these wells, our consultants performed type curves and other performance metrics for each play. We developed a set of tools and a database that could be used to evaluate play performance and perform statistical analysis.

Result
The client is in the process of implementing this project within its organization and merging this with other geologic information and internally gathered information.

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Understanding the Keys to Success With Unconventional Plays

Challenge: An Indian E&P company that only had experience in conventional developments wanted to asses a near-term oil shale opportunity and establish an unconventional business unit. Only a few members of the team had experience with...
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Challenge
An Indian E&P company that only had experience in conventional developments wanted to asses a near-term oil shale opportunity and establish an unconventional business unit. Only a few members of the team had experience with unconventional plays. The COO (who was experienced in unconventionals) wanted a common level of understanding among all members of his team.

Solution
IHS undertook a two-phase project to help the client. During the first phase, we drew on our North American database and used North American analogues and case studies to characterize key technical parameters, technologies, costs, risks and the evolution of unconventionals. In the second phase, we used the common basis of understanding established in the first phase and case histories of successful and failed plays to develop insight into the keys to success with unconventional developments.

Result
Once we provided the COO’s team with a common level of understanding of unconventional plays, the COO was able to align his team and a presentation pack was created for the executive board. Overall, our work created a platform that enables the client to assess near-term and future unconventional opportunities.

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Using North American Plays to Rank European Shale Gas Plays

Challenge: A large independent that wanted to enter the European shale gas arena needed to understand the production, costs and economics for different European shale plays. Because most of these plays are virtually undrilled...
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Challenge
A large independent that wanted to enter the European shale gas arena needed to understand the production, costs and economics for different European shale plays. Because most of these plays are virtually undrilled, there is very sparse and uncertain data available for analysis.

Solution
Recognizing the unavailability of critical production data for the analysis, IHS collected rock and geochemistry characteristics for each European play and compared these to similar data from more mature North American shale plays. We matched each European play with a North American play that had its production characteristics and used North American analogs to assign per lateral IP, decline and EUR, well spacing, pace of drilling and cost. Based on areal coverage determined from shale body mapping, we derived total wells and production forecasts.

Result
By using North American plays, we were able to perform economic analysis of European shale plays to determine the best ones, helping the client decide which plays to aggressively pursue.

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Assessing Conventional Assets’ Potential Shale Targets in India Using US Shale Plays

With potential shale gas and shale oil targets on commercial leases in India that were already producing from conventional reservoirs, a client needed help understanding technical and commercial issues such as geology, cost, performance...
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Challenge
With potential shale gas and shale oil targets on commercial leases in India that were already producing from conventional reservoirs, a client needed help understanding technical and commercial issues such as geology, cost, performance and development strategies from mature plays in order to develop a strategy for moving forward.

Solution
IHS evaluated and analyzed major US shale oil and shale gas plays that were similar geologically to the client’s potential resource and that could be used as possible analogues. We also developed a set of success factors and possible development strategies which could be used to commercially develop this resource.

Result
After receiving the IHS analysis, the client began gathering additional information, while developing its conventional resource in anticipation of developing the unconventional resource (for example, coring the potential shale formation).

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Giving an Independent Investment Fund Insight Into North American Natural Gas Market Dynamics

Challenge: An independent investment fund evaluating a number of investments in the natural gas upstream and midstream sectors needed an independent assessment of the outlook for gas productive...
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Challenge
An independent investment fund evaluating a number of investments in the natural gas upstream and midstream sectors needed an independent assessment of the outlook for gas productive capacity, costs, demand and price.

Solution
IHS produced a report documenting the outlook by region for North American natural gas production, costs, imports, demand and price for a base case and one alternative scenario. We also developed custom production and cost analyses for seven specific natural gas plays.

Result
Based on its enhanced understanding of the natural gas market as provided by IHS, the client entered into a joint venture with a leading independent natural gas producer to develop the midstream infrastructure for several evolving natural gas plays.

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Business Strategy Development

IHS applies a range of uncertainty and decision tree analyses to provide insight into strategic alternatives.

Developing a Strategy to Monetize a Shale Gas Play in Western Canada

Challenge: A large North American upstream company that had accumulated a significant land position in shale gas in western Canada needed help monetizing its play. Because unconventional gas plays were largely...
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Challenge
A large North American upstream company that had accumulated a significant land position in shale gas in Western Canada needed help monetizing its play. Because unconventional gas plays were largely unproven other than the Barnett Shale in Texas, the company had been operating a small appraisal program to test its commercial development potential.

Solution
IHS developed a strategic roadmap for the client’s shale gas investment. The strategic roadmap specified the key signposts from the appraisal program to either exit or launch full-scale development. We evaluated a wide range of development alternatives addressing key decisions such as pacing, technology, well spacing, partnering and infrastructure.

Result
With the IHS analysis, the client clearly understood the option value of its land position in the shale gas play. The company was able to make key near-term decisions to secure infrastructure and to begin work to reduce cost, which was the key value driver.

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Creating a Gas Business Strategy for a Large Upstream Company Unfamiliar With the Sector

Challenge: While it had regional gas assets in the Russian Federation, a large upstream company did not have extensive experience in the regional gas business. The client needed to develop a business...
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Challenge
While it had regional gas assets in the Russian Federation, a large upstream company did not have extensive experience in the regional gas business. The client needed to develop a business strategy that considered the regional gas gathering, compression and processing infrastructure.

Solution
IHS developed seven distinct strategic alternatives for the regional gas business and implemented rigorous risked economic evaluations. Our consultants identified internal gas transfer price issues and opportunities between upstream and midstream, as well as opportunities to invest in a new gas processing plant and expand its current facility. The key insights we provided extended from reservoir to downstream and included the identification of high-value horizons, regional pipeline infrastructure and seasonality studies, gas-to-power options and an exploration program.

Result
With the IHS study, the client was able to achieve full alignment between its regional business unit and corporate headquarters. It made the decision to invest in the identified opportunities and developed and implemented a gas exploration program.

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Helping a Government Agency Understand the Decision Economics Behind Building Heavy Oil Upgraders

Challenge: With a large interest in the heavy oil industry, a government agency wanted to understand what economic opportunities and risks exist in the heavy oil upgrader business in its region. This included the economics of upgrader projects as well as social...
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Challenge
A major operator in several US and Canadian unconventional plays that wanted to expand into additional unconventional plays needed help identifying all major plays, sub-plays and sweet spots and comparing and contrasting their performance. This analysis would provide a starting point for developing analogues that could be used to evaluate new plays

Solution
Taking the perspective of a mid-stream investor, IHS compared the economics of five comparable alternatives for a typical upgrader, using both deterministic and sensitivity analysis. We examined the impact of key uncertainties on project economics, such as the dynamic cost environment, volatile discount for input, the potentially limited market for output and diluent supply constraint. We also defined specific factors that would make the client’s region more attractive for the upgrader business and studied the wider social impact of the business in the region.

Result
With the IHS study, the client now clearly understands economic drivers such as cost factors behind upgrader location choices. It is now able to focus on the factors that can make a difference in attracting future midstream processing businesses.

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Strategic Due Diligence & Valuation Systems

A multi-disciplinary team conducts a thorough risk evaluation of deal terms and opportunities to participate in investment opportunities.

Performing Due Diligence and Valuation Analysis for an Investment Bank

Challenge: An investment bank evaluating an acquisition target in the oil service industry wanted a forecast for well services activity in the region under different scenarios. It also wanted to understand the main drivers for oil...
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Challenge
An investment bank evaluating an acquisition target in the oil service industry wanted a forecast for well services activity in the region under different scenarios. It also wanted to understand the main drivers for oil service companies’ profitability and activity levels.

Solution
IHS generated oil and gas production outlooks for each relevant country in the region including fields under production, development, appraisal and future exploration. We developed a detailed forecast for well drilling activities and rig requirements by type based on oil and gas production outlooks. We then used the outlook to estimate drilling rig day-rates for each scenario and to estimate well service companies’ revenues and market share.

Result
The IHS study provided the client with a clear understanding of the key activity and profitability drivers for the oil service industry and their changes across different scenarios. The client also received a scenario-specific market value assessment and revenue outlooks for the oil service industry in Latin America.

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Assessing a Possible Acquisition in Eastern Europe

Challenge: A Middle Eastern investor, which made an initial commitment to acquire a Ukrainian company whose assets included a gas field and a number of land drill rigs, needed help valuing the assets...
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Challenge
A Middle Eastern investor, which made an initial commitment to acquire a Ukrainian company whose assets included a gas field and a number of land drill rigs, needed help valuing the assets and identifying risks.

Solution
IHS assessed the gas field and identified asset refurbishment trends, remaining reserves and future well workovers. We reviewed the future gas price in Ukraine, identified the project’s technical, commercial and geo-political risks, and calculated project economics under the current tax regime. In addition, we assessed the condition and capabilities of the company’s rigs and the extent of any repairs, refurbishments and replacements that were made. We also identified Ukrainian market drivers and trends as well as Eastern European rates for rigs to project for possible future levels, based on upgraded rigs.

Result
Based on our work, the client engaged us for an additional phase to further explore the identified risks, using the base case assumptions that were agreed upon by the client. The client then proceeded with the acquisition, deciding it would help in the development of a long-term position in the country.

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Economic Modeling & Fiscal Systems Analysis

Evaluation of market factors and opportunities within existing fiscal systems.

Evaluating an Investment Opportunity in a Small Shale Gas Company

Challenge: An international private equity fund needed help evaluating an opportunity to invest in a small shale gas company...
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Challenge
An international private equity fund needed help evaluating an opportunity to invest in a small shale gas company.

Solution
IHS evaluated and benchmarked the quality of the assets involved and evaluated key assumptions used in the target’s valuation model, such as costs, well performance, project management and economics. We found that the current assumptions were either optimistic, hid substantial risks or ignored important features of the market. We then reviewed and evaluated the target’s business model, strategy and plan, and evaluated the target firm’s managerial and technical capabilities. Finally, we used proprietary databases to assess its capabilities to provide an investment roadmap with clear performance milestones.

Result
IHS identified risks to post-acquisition expansion plans, such as access to rigs and service companies, implementation of manufacturing processes and continued funding. We also provided the client with initial and contingent work plans and quarterly milestones for the post-acquisition business plan.

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Evaluating Development Options for an In-situ Oil Sands Project

Challenge: A large North American integrated oil company wished to craft and evaluate a wide range of development concepts for a large in-situ oil sands project...
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Challenge
A large North American integrated oil company wished to craft and evaluate a wide range of development concepts for a large in-situ oil sands project.

Solution
IHS helped the client construct and evaluate various development concepts, including oversizing the steam facility to accelerate peak production, burning alternative fuels to minimize fuel cost and using a phased development plan to minimize lifecycle cost.

Result
With a clear understanding of the trade-offs against other metrics, the client chose the development concept that minimized project unit lifecycle costs.

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Market Analysis & Forecasting

Forecasting of the market potential for specific support activities within unconventional plays.
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Assessing Eastern European Power Generation Privatization Opportunities

Challenge: Russian and Ukrainian power generation companies were due for privatization, raising interest from several European utilities. An Eastern European utility had developed a strong position in Eastern Europe and was...
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Challenge
Russian and Ukrainian power generation companies were due for privatization, raising interest from several European utilities. An Eastern European utility had developed a strong position in Eastern Europe and was looking for new sources of growth.

Solution
IHS provided a sound review of Russian and Ukrainian energy market regulation and policy and developed an exhaustive database of power plants, fuel prices and power demand. By working in close collaboration with the utility’s market fundamentals team, we also valued the largest Russian and Ukrainian generation companies using a range of future alternatives.

Result
With our analysis, the company clearly understood the potential value and related risks of investing in a power generation company in both Russia and Ukraine. The company decided to close local offices as potential value from such investments did not make it a priority.

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Analyzing Extra Heavy Oil Monetization Options

Challenge: With a large interest in the heavy oil industry, this client wanted to understand different ways of monetizing extra heavy oil resources and how to best maximize investment value. The company also wanted to gain a detailed understanding of the risks and...
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Challenge
With a large interest in the heavy oil industry, this client wanted to understand different ways of monetizing extra heavy oil resources and how to best maximize investment value. The company also wanted to gain a detailed understanding of the risks and opportunities associated with the different monetization options being considered.

Solution
IHS created a study that offered a detailed upstream operating and investment cost estimate for each one of the identified monetization options under different scenarios. We also provided an economic analysis based on the estimated cost structure and oil price environment for each monetization option. In addition, the study examined the impact on project economics of a number of key uncertainties, such as the dynamic cost environment, volatile product prices, well and reservoir productivity, and market prices. Furthermore, we used forward-looking analysis of the regulatory environment in the host country and fiscal takes to perform a SWOT analysis.

Result
The client used the IHS study to support a very important investment decision and optimize its capital allocation upstream. The study also enabled the client to focus its business development efforts and negotiate better licensing terms.

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Helping an Independent Oil Company Meet Its Growth Goals

Challenge: An independent investment fund evaluating a number of investments in the natural gas upstream and midstream sectors needed an independent assessment...
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Challenge
An independent investment fund evaluating a number of investments in the natural gas upstream and midstream sectors needed an independent assessment of the outlook for gas productive capacity, costs, demand and price.

Solution
IHS produced a report documenting the outlook by region for North American natural gas production, costs, imports, demand and price for a base case and one alternative scenario. We also developed custom production and cost analyses for seven specific natural gas plays.

Result
Based on its enhanced understanding of the natural gas market as provided by IHS, the client entered into a joint venture with a leading independent natural gas producer to develop the midstream infrastructure for several evolving natural gas plays.

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Developing a Market Assessment to Support an Onshore Drilling Acquisition

Challenge: An established drilling group was considering acquiring a drilling contractor with an international and onshore drilling capability. As part of its due diligence process, the client needed an independent organization to...
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Challenge
An established drilling group was considering acquiring a drilling contractor with an international and onshore drilling capability. As part of its due diligence process, the client needed an independent organization to assess the market and provide an analysis of the risk of operating in the identified countries.

Solution
IHS evaluated the target countries’ drilling markets using historic and current data on exploration and development well requirements with projections on anticipated activity. Also, by identifying each country’s political situation and the availability of export routes in other developing regions, we formed the basis for a range of potential outcomes. The risk assessments were based on established country petroleum risk factors in the IHS database and were supplemented by an assessment of typical commercial business risks.

Result
With the IHS analysis, which placed European and Caspian projections in a global context of prevailing US and international trends and activity and highlighted uncertainties and risks, the client had support for its decision to pursue the acquisition, which proceeded satisfactorily.

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Analyzing Marketing Opportunities for an Oil Service Firm

Challenge: An oil service firm sought to identify potential fields that could use its new gas-to-liquids conversion technology, which was best suited for fields meeting certain maximum gas production rate criteria. The client...
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Challenge
An oil service firm sought to identify potential fields that could use its new gas-to-liquids conversion technology, which was best suited for fields meeting certain maximum gas production rate criteria. The client needed to have a clearly identified market that targeted fields with stranded gas and flared or reinjected gas.

Solution
IHS helped the client develop a range of criteria to help identify fields that met the client’s criteria and applied the criteria at a country level. Using our objective analysis and some subjective factors, the client came up with a list of countries that met its criteria. We then used disparate information from our database to create a list of fields that could best use the client’s technology.

Result
With its new ability to screen and compile a list of potential fields to target, the client was delighted by the fact that it could direct its staff to start talking to operators of the identified fields.

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Assessing US Demand for Premium Oil Country Tubular Goods

Challenge: An international supplier of premium oil country tubular goods was looking to expand its operations in the US. Identifying...
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Challenge
An international supplier of premium oil country tubular goods was looking to expand its operations in the US. Identifying a trend for the increased use of premium oil country tubular goods, especially in deepwater and shale plays, the client anticipated higher demand for its premium products but needed an independent opinion to strengthen investor confidence.

Solution
Using IHS production outlooks and projects databases to determine future production in key premium oil country tubular goods markets, IHS consultants estimated the number of new wells required to meet production, taking into account well decline and typical well productivities. Based on feet drilled and typical well designs for each target market, we estimated the total tonnage of oil country tubular goods that would be needed and estimated the percentage of the market that would use premium products.

Result
With the IHS market analysis, the client was able to reassure its investors and confirm its investment strategies. Also, with a clear view of the scale and the ratio of the potential key target areas, the client could focus on those markets where it could offer a commercial advantage.

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Analyzing the Argentinean E&P Sector and Gas Market

Challenge: Anticipating significant opportunities in the Argentinean E&P sector, a major oil and gas company needed a better understanding...
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Challenge
Anticipating significant opportunities in the Argentinean E&P sector, a major oil and gas company needed a better understanding of the sector and the gas market in particular to help best position itself to take advantage of its prospects.

Solution
IHS developed a comprehensive study with two parts. The first part offered an overview of Argentina’s hydrocarbons sector environment, including analysis of the role of oil and gas in the Argentinean energy mix, the market structure and main players, the legal and contractual context, the energy policy context, and key Southern Cone regional issues. The second part provided an analysis of Argentina’s natural gas supply, demand and prices, focusing on current trends and the outlook to 2025.

Result
The IHS study, which addressed the high level of uncertainty in Argentina’s energy sector, provided the client with a framework to evaluate a specific acquisition. With the help of the IHS analysis, the client ultimately decided to not pursue the acquisition.

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Capital Strategy Development for Transport, NGLs and Chemicals

Assessment of investment requirements for infrastructure and manufacturing plants associated with forecasted production from unconventional plays.

Determining the Global Market Potential for a Production Processing Company

Challenge: To aid in the development of its corporate marketing strategy, a company sought to understand the relative value and growth of national markets for production...
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Challenge
To aid in the development of its corporate marketing strategy, a company sought to understand the relative value and growth of national markets for production processing equipment internationally.

Solution
Using IHS worldwide databases and the IHS GEPS scouting service, IHS consultants identified greenfield and brownfield (phased) developments that met minimum field sizes. We targeted six countries for analysis using IHS QUE$TORTM to determine process component costs that were categorized by function and throughput. Non-target country estimates were based on a generalization of the target countries’ field assessments. In all, we performed more than 160 development plans and costs estimates for a range of sizes, situations and regions/countries.

Result
IHS provided a five-year forecast of capital expenditures on process equipment for 33 countries.

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Analyzing North American Natural Gas and NGLs Markets

Challenge: A major North American natural gas transportation and gas liquids processing company asked IHS to provide an in-depth analysis of US and Canadian market...
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Challenge
A major North American natural gas transportation and gas liquids processing company asked IHS to provide an in-depth analysis of US and Canadian market developments and the implications of future uncertainties.

Solution
IHS provided a comprehensive assessment of gas production from conventional and shale gas plays in western Canada and the Marcellus Shale. After preparing forecasts of production and gas prices for produced wet and dry gas, we determined the composition of the associated gas liquids, with breakdowns of the volumes of the NGL components. For the projected production levels, we also determined the volumes of NGLs required to be extracted in order for the dry gas to comply with pipeline specifications, as well as the status of pipeline and local demand for absorbing those NGLs.

Result
The IHS analysis provided a clear picture of the potential impact of western Canadian and eastern US shale gas production activities on the gas liquids extraction requirements in the mid-continent US market.

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Determining Suitable Locations for a Methanol Company’s Future Producing

Challenge: A methanol company wanted to develop a strategy for a future investment in production facilities. The opportunities would need to reflect the size and cost of gas supply as well as local political...
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Challenge
A methanol company wanted to develop a strategy for a future investment in production facilities. The opportunities would need to reflect the size and cost of gas supply as well as local political factors.

Solution
IHS undertook a phased screening study with frequent client discussions to agree on criteria for the progressively short-listed opportunities. We screened for all countries outside North America by reviewing factors such as gas potential, alternative gas monetization and political risk. During the second phase, we reviewed field opportunities (such as size, characteristics and location) against alternative plant technologies including commercial aspects (such as economics and ownership). The detailed economic assessments of the field opportunities that we provided included local fiscal terms and an associated SWOT analysis.

Result
IHS delivered a comprehensive assessment of an agreed-to short list of six opportunities that the client could use as a basis for its corporate decisions.

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