In the mid-2010s, clients worldwide sought ADI’s help to replicate shale’s success. I spoke at conferences in the UAE, Australia, India, Thailand, and Europe on developing unconventional resources domestically. Sadly, many efforts failed, and unconventional resource development has only recently picked up outside the U.S. most notably in Argentina, China, and Australia. International players and some pioneering U.S. independents are venturing overseas, leveraging North American lessons and expertise to unlock new opportunities worldwide.
The global reach of shale development
While many U.S. shale E&P independents remain laser-focused on domestic plays, prioritizing operational efficiency and cost reduction in their “factory mode” approach, some are strategically expanding their horizons. Companies like EOG Resources, for instance, are actively pursuing international unconventional projects, demonstrating a clear appetite for global growth. EOG’s ventures in Trinidad, Bahrain, and the UAE showcase a model of leveraging core horizontal drilling and completion expertise in new geological settings, aiming for economics competitive with their U.S. portfolio.
Beyond EOG, other major independents like ConocoPhillips and APA Corp have long-standing and diversified international portfolios, including conventional and unconventional assets across multiple continents. Even companies like Occidental maintain a selective international presence, primarily in the Middle East and North Africa.
U.S. companies are applying advanced shale expertise globally to optimize operations. ADI Analytics has helped international clients with this, sharing insights on organizational models and best practices. This transfer of North American know-how is crucial for global unconventional resource development. Their support includes understanding operational efficiencies and governance frameworks.
Key insights from international unconventional ventures
The expansion of unconventional resource development beyond North America highlights several themes that underpin success in these new frontiers:
- Strategic partnering and local alignment: A crucial element for international success is the selection of exceptional partners. EOG’s collaboration with Bapco Energies in Bahrain exemplifies this, as Bapco provides strong local partnership and stakeholder alignment. This strategic choice of partners, alongside a focus on geopolitical stability in the operating environment, is a best practice. The Bahrain project, for example, is expected to deliver economics competitive with EOG’s domestic portfolio.
ConocoPhillips previously engaged in Australian ventures, including a Queensland CBM/LNG joint venture with Origin, highlighting the importance of local partnerships. They also partnered with New Standard in Australia’s Canning Basin, though they later withdrew. ADI Analytics assists clients in identifying strong potential partners. This involves a structured process that considers both financial and technical capabilities, leveraging insights from various plays. - Leveraging core expertise for value uplift: Successful international unconventional ventures are built upon applying proven technical capabilities to new reservoirs. EOG, as the operator of its joint venture with Bapco Energies, intends to directly apply its horizontal drilling and completion technologies to enhance results from Bahrain’s tight gas formations.
The confidence in this approach stems from past tests using horizontal technology that yielded positive results in the region. This demonstrates the power of utilizing specialized expertise to unlock significant value from existing discoveries, a critical need for operators venturing into new unconventional plays. Shell, in a past initiatives, was developing a well system for high-density drilling slated for commissioning in shale plays. This involved Shell leading the design, development, and contribution of its proprietary technologies. - Operational efficiency and “shale-like” economics: The “unconventional mindset” prioritizes low and managed costs, compressed schedules, and operational efficiencies across the value chain (see Exhibit 1). The Bahrain partnership offers immediate access to local gas markets through existing infrastructure. EOG has noted in its earnings calls that access to existing infrastructure and midstream in the area would allow them to go to sales quickly.
Exhibit 1. The unconventional value chain with its critical functional capabilities.
In addition, existing oilfield services infrastructure also enables rapid commercialization if successful. The potential for the unconventional natural gas prospect to deliver U.S. shale-like economics further aligns with EOG’s focus on high-return investments. For companies seeking to achieve such efficiencies, understanding how to optimize costs and timelines, including strategic procurement and supply chain management, is paramount.
Pioneer Natural Resources, for example, in the early days of the shale boom claimed that vertical integration improves returns and enhances execution and aimed to fulfill approximately two-thirds of its needs through internal capabilities, including pressure pumps, rigs, and well service equipment. EOG Resources has also stated that self-sourced sand saves $500,000 per well, leading to significant savings. ADI Analytics has helped clients by reviewing best practices for managing standards and processes. ADI has also provided insights into how U.S. companies addressed midstream infrastructure gaps in shale basins.
- Adaptable organizational structures: The success of unconventional plays demands organizational agility. Companies venturing into international unconventional plays are increasingly adopting this philosophy, emphasizing rapid appraisal and a quick transition to execution. Successful unconventional players often feature asset-centric teams with technical staff embedded for lean, fast, and accountable operations. Pioneering unconventional firms tend to have minimal corporate processes, granting autonomy to the asset level for program approval and management.
Recognizing the global competition for unconventional technical expertise, companies are adjusting recruitment and talent management strategies to attract and retain the necessary talent. In the past, Devon Energy, for instance, realized its talent management processes needed to change as its unconventional plays and competition grew, leading to a new strategy with HR leading development and career paths, utilizing analytics to define HR strategy, and moving to internal recruiters.
Navigating the nuances of international unconventional resources
While the technical principles of unconventional development translate, international ventures bring unique considerations. These include navigating different regulatory environments, understanding local infrastructure availability, and adapting to diverse geopolitical landscapes.
For instance, the demand for midstream capacity is high in new basins, often requiring new infrastructure, and permitting can be a primary issue for building new capacity. In some areas, companies have developed their own midstream units and then sold them off. Range Resources, for example, partnered with MarkWest, sharing investment in gathering, processing, and midstream assets for long-term transportation contracts and access to production.
The experience from North America, especially in resolving midstream gaps and managing stakeholder relations, is invaluable for new international ventures. Companies must define structured processes to screen potential partners. This includes selecting diverse factors to develop robust screening criteria. ADI Analytics has helped clients identify a large pool of leading unconventional players. This support includes refining recommendations for potential partner companies.
The global energy transition and evolving market dynamics are continuously creating new opportunities for unconventional resource development. By tapping into proven U.S. expertise and adopting the right strategic approach, companies can unlock significant value beyond North American borders.
– Uday Turaga
About ADI Analytics
ADI is a prestigious, boutique consulting firm specializing in oil and gas, energy, and chemicals since 2009. We bring deep expertise in a broad range of markets where we support Fortune 500, mid-sized and early-stage companies, and investors with consulting services, research reports, and data and analytics, with the goal of delivering actionable outcomes to help our clients achieve tangible results.
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