Scouting the Permian from space

McKinsey uses artificial intelligence image processing to provide ‘absolute accuracy’ in identification of frack jobs, assets and equipment and new activity, twice monthly. 20% of new well pads cleared sans permit!

McKinsey bloggers report on scouting Permian basin activity from space. Earth observation satellites provide an accurate view of shale activity in near real time, now that high and very high-resolution imagery is commercially available. On-demand image acquisition with up to daily revisits and advanced-analytics image processing provides an ‘outside-in’ way of reporting on activity, independent from other market sources.

McKinsey uses AI image-processing to provide ‘absolute accuracy’ and fine detail enough to identify a frack job and count the number of trucks involved. McKinsey has monitored 30,000 square kilometers of the Permian twice a month since September 2019 and has identified every newly cleared well pad and drilling or fracking event.

Satellite-derived observations have been combined with publicly-available regulatory data using ‘advanced analytics’ to provide insights into shale oil and gas activity. The McKinsey analysis found that new well-pad clearances have been increasing steadily since November 2019, with large public E&P companies leading the pack and a decline in the share of majors. Intriguingly, 20% were cleared without filing for a permit!

McKinsey is now working to add new data attributes such as working capital (for rigs, pipes, sand, and frac fleets) and pad-specific information on water and sand injection, opening up new opportunities for optimizing operations and monitoring competitors.

The McKinsey approach mirrors that used by Verisk/WoodMac, as we reported from the 2019 Esri PUG, and Baker Hughes’ truck-mounted ‘AI-to-go’ surveillance, the lead in our last issue. We also heard at the PUG from Orbital Insight on how oil storage can be tracked by checking the shadow on oil storage tanks.

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