Can Conventional E&P Bring The Next Generation Of Oil Fortunes?

This article is a very good commentary on the conventional vs non conventional oil and gas resources at play in the US.  The unconventional plays simply require more capital than the smaller players can (or should) afford.  Much of the current and coming financial strife in the industry are a result of under capitalized investors pursuing expensive and seemingly risk free investment in the shale plays.  We are now learning that there is risk even in shale plays.  While dry holes are rare, you can still drill uneconomic wells.  In the end, an uneconomic completed horizontal well can cause much more financial devastation than a dry hole in the conventional sense.

When it all shakes out, we will have an industry where only the majors and large independents can afford to play the unconventional plays.  The smaller independents will have to return to working conventional projects.   One problem the industry faces with the big crew change that is occurring, is the conventional experience is quickly disappearing.  The new people who entered the industry within the last ten years only know horizontal shale drilling and completion in settings where geology was not a significant concern.  Old fashion prospecting that utilizes detailed geology, seismic, log analysis, drilling, production, reservoir engineering, economic analysis and a big dose of risk management will be the new order of the day.

Link to original article
Share The Story

About the author

Tom Hohn is a petroleum engineer who has worked in the oil and gas industry for 40+ years. He has endured several booms and busts during that time. In reality, the tough years outnumber the good years, but it is a great industry that has treated him well.