Don’t expect completions activity to increase in U.S. shale plays next year.

With the price for a barrel of West Texas Intermediate crude expected to hover between $54 and $60, forget about any rise in capex, too.

Oilfield services prices are forecast to be relatively flat, and so is overall demand for pressure pumping.

What is expected to increase, however, is efficiency.

This is according to analysts at Rystad Energy, which presented its 2020 outlook during a drilling and completions (D&C) webinar this week.

“We have seen the rig count decline pretty substantially over the past few quarters, but wells drilled haven’t really declined at that same rate due to high-grading on the rig side, causing an uptick in efficiency,” said Thomas Jacob, a senior analyst for Rystad. “Essentially, we are drilling more wells on a per-rig basis.”

However, operators are paring down drilling programs and spending as they focus more on returns and improved efficiency in a low-price environment. With eyes on free cash flow and heightened capital discipline, many shale players are working to prove to investors and others that they can efficiently grow within cash flow.

The slowdown is already evident, and it’s expected to carry into next year.

Capex is forecast to fall by 10% by Rystad’s estimates. The firm also says the number of horizontal wells spud will fall by 8% next year, compared to 2019. The count saw a 12% drop in third-quarter 2019, falling to 3,659 from 4,139 in the second quarter.

Likewise, the number of wells fracked is also expected to drop, down 2% in 2020.

“The rig count is expected to hover around that 800 mark for the next two years,” Jacob said. He added, “Due to budget exhaustion, there has been a buildup of DUCs and we do see that completions will be pushed out for the first half of next year.”

All of the downward arrows—combined with crews capable of doing more with less—mean less demand for pressure pumping services. Demand for frac horsepower is expected to drop again next year, hitting 15.1 million hydraulic horsepower (HHP). That’s down from 16.3 million HHP in 2018 and 15.6 million HHP in 2019. Jacob added supply will also shrink as cold-stacked HHP retires by year-end 2020, lowering the supply to 21 million HHP.

However, the trend of longer lateral lengths could bring a small boost for frac sand suppliers, which have also suffered losses due to the drilling slowdown.

Frac sand provider Carbo Ceramics Inc. issued a “going concern” warning to investors Nov. 8 after one of its customers stopped buying its sand.

RELATED: US Frack Sand Suppliers Become Latest Casualties In Shale Slump

“We’ve seen growth and demand projections slowing down considerably in 2019,” Jacob said later noting sand intensity for most major U.S. shale plays have stabilized between 2,000 and 2,500 pounds per foot. “We only see 3% increase in frac sand demand for 2020, reaching approximately 120 million tons. We don’t see demand increasing above 140 million tons in the next five years.”

However, the activity slowdown comes amid continued efficiency gains. While the rig count has consistently fallen, companies have been able to produce more oil thanks to better rigs and other efficiency gains.

Looking at D&C efficiency metrics, Rystad analyst Ryan Hassler pointed out improvement in just about every category in the Permian Basin’s Delaware and Midland sub-basins, Eagle Ford Shale, Appalachia’s Marcellus and U.S. land as a whole.

For example, the number of HHP hours pumped per day saw a 20% improvement in the Midland Basin and 48% improvement in the Marcellus. Double-digit percentage jumps were seen in areas such as zipper frac penetration in the Delaware, horizontal wells fracked per active crew and drilling days per 1,000 ft among others.

However, there is still room for improvement, Hassler said. Such areas include zipper frac penetration in the Marcellus, stimulation days per well and multiwell pad size in the Eagle Ford and horizontal wells drilled per rig in the Delaware.

Hassler singled out the Delaware Basin as trailing other major shale plays in several areas, including multiwell pad penetration and zipper frac penetration, though strides have been made.

In the Marcellus, Bakken, Denver-Julesburg, Eagle Ford and Midland, the average multiwell pad penetration is about 90% to 95%, Hassler said. That compares to about 76% in the Delaware.

“So, going into 2020 and beyond, we expect it to continue increasing as efficiencies keep improving,” he said. “This is a metric that’s allowing crews to move around quicker and reduce the NPT.”

Similar data were shared for zipper frac penetration with the Delaware Basin at about 66%, compared to 85% to 90% for the others.

Although capex is expected to drop by 10%, the drop in D&C won’t be as steep given the continued drive for efficiency gains, according to the analysts.

“The room for growth in many of the metrics looked at today and the reduction in NPT going into 2020 will provide opportunities for operators to complete more work in less time with the same amount of equipment, all while continuing to challenge the service providers as prices remain depressed and demand continues to be stifled,” Hassler said. “We believe that we have entered a new era of operations in the shale industry, with operators putting a lot more on cost savings, supply chain optimization and efficiency gains.”

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