It's been a little over a decade since shale and its accompanying repercussions on global energy have made an unprecedented impact on not only the U.S. energy picture, but also the global energy picture.
From left are Mark Gunnin, president of Hunt Oil Co., Doug Suttles, president and CEO of Encana; and Lee Tillman, president and CEO of Marathon Oil Corp.
Possibly the most disruptive aspect of that impact, according to Lee Tillman, president and CEO of Marathon Oil Corp., is that it appeared on the scene at a time when it "really staked out kind of a unique place on the cost-to-supply curve."
Not only has shale maintained that unique place, but the rate of change in improvement represented by collective shale plays continues to accelerate its competitiveness, Tillman said, participating on a panel discussion titled "North American Shale: Taking on the World" at CERAWeek by IHS Markit, held recently in Houston.
"I think that has come into very sharp view, as we now know that shale is going to be a major part of the energy mix for the foreseeable future," Tillman said. "I think the short-cycle nature of it and the ability of it to respond very quickly to commodity prices is unique. And the fact that it is still such a young asset type, the amount of innovation and the amount of change that is still yet to come, driven by technology, is going to continue certainly from this point on."
Doug Suttles, president and CEO of Encana, said he agrees with Tillman about the shift shale has created.
"There's no doubt that the technology has been disruptive," he said. "It's shifted the landscape of where energy is produced in the world, and it's also had implications for everything from national security to where wealth is created."
In the energy sector, wealth is created where energy is produced and "not necessarily where it's consumed," Suttles added.
Suttles noted that one of the "very positive disruptions" that has accompanied the shale revolution is that it's been one of the driving forces to re-energize manufacturing in the U.S.
"Fundamentally, we have incredibly low-cost energy in this country for as far as any of us can see out in time," he said.
'Jumping the curve'
In addition to spurring manufacturing, a second notable byproduct of shale technology is the reduction of carbon emissions, Suttles said, characterizing this disruption as "incredible" and questioning if the shale revolution would have evolved in other parts of the world to the extent that it has in the U.S.
"Early doubters didn't believe it could be cost competitive," he said. "They thought it would be on the expensive end of the supply-cost curve. Turns out, it's on the low-cost end and it's the first piece of technology in a long time that came in at scale on the low end of the curve."
Nonetheless, shale "jumped the curve," he said.
"And it wasn't a small piece of supply," he added. "It turned out it was a very large piece of supply, and it has been incredible." Suttles noted that shale also has "a much more attractive risk profile than the other things we do in this industry."
Joining Suttles and Lee on the panel, Mark Gunnin, president of Hunt Oil Co., said that while the industry is in the early stages of the shale revolution, he believes his and other companies will focus not only on how quickly and efficiently wells can be drilled and completed, but also on applying new technologies to traditional, old production mentalities and engineering.
"I think as this industry matures and as some of these oil basins in particular mature, then managing through those cycles and those issues will become an increasingly important part of all of our businesses," he said.
Raoul LeBlanc, vice president of North American Unconventionals for IHS Markit, moderated the discussion.
