How the technical differences between shale gas and conventional gas projects lead to a new business model being required to be successful

Abstract

This paper will make the case that the unconventional natural gas business is not the same as the conventional natural gas business. The skills involved in finding, developing and producing discreet pools of oil and gas are not identical to those for shale gas projects. However, they are similar enough that many companies large and small have not recognized this difference and have not changed their business models. Those companies are struggling to succeed. Others have become huge successes seemingly overnight.This paper is based primarily on our experience as a junior oil and gas start-up company with three different shale gas plays, as well as my observations as President of one of the first junior companies in Canada to become involved in shale gas. Our first shale gas play was the Liard Basin Besa River shale play in northeast British Columbia in western Canada. We tried conventional approaches, with the usual business model, and failed. Worse, we had to go back to the beginning of the learning curve and start over.More recently we have applied the new technical methods in our Utica shale gas play in Quebec in eastern Canada with great technical success. However, other “orders of magnitude” factors required for success have stalled our progress as we struggle with acquiring new skills in public policy and politics.Based on these experiences, it is our belief that geology and sound science still matters now more than ever. It is our position that new skills and approaches are needed in areas that have not been the traditional strengths of our industry.