Oil CEOs discuss why the US shale boom hasn’t gone global at CERAWeek

Hess Corp. CEO John Hess at CERAWeek/ Getty Images

Hess Corp. CEO John Hess at CERAWeek/ Getty Images

IHS CERAWeek 2015 is currently taking place in Houston and has brought all the top oil industry executives and their take on pressing topics to Houston, Texas.

One of the topics discussed by a panel of CEOs at the Hilton Americas-Houston yesterday was the evolution of a shale boom globally. Executive leadership outlook on the US shale boom taking off in other countries was not very optimistic.

Harold Hamm, CEO of Continental Resources (NYSE: CLR) and one of the Bakken Shale biggest producers, stated he has no desire to expand the shale movement abroad.

The best shale formations outside the US can be found in volatile regions with significant political unrest such as the Middle East, North Africa, and Russia, according to Hamm.

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CEO of Pioneer Natural Resources (NYSE: PXD), Scott Sheffield, a major player in the Permian Basin, stated that outside the US, there’s no private mineral ownership, a driver in the North American shale oil boom for the last six years.

“The cost to do business is two to three times,” he said. “It’s not going to work in today’s prices at all.”

A country needs five key “enablers” that can be found in Canada and the US, according to Hess Corp. (NYSE: HES) CEO John Hess. The enablers are right geology, private mineral rights to give local landowners an incentive to let drilling rigs on their property, infrastructure capable of supporting thousands of trucks moving rig equipment, a pragmatic tax system and a pragmatic regulatory system. According to Hess, few countries in other regions meet this criteria to make shale viable.

Daniel Yergin, vice chairman of IHS said, “How many countries meet all five criteria?”

Hess states, “Not too many that we’ve found yet,” with the exception to Argentina, who is moving forward with shale exploration. “They’re at the start of the journey that the US was ten years ago.”

Aside from Argentina, there are not many countries with enough upside for big oil exploration to expand shale operations. “China may have more natural gas than the U.S. trapped in shale, but the geology hasn’t proved as ripe as many have thought,” Hess stated.

IHS CERAWeek is the premier annual international gathering of energy leaders, experts, and government officials. This year marks the 34th anniversary of the influential event.


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