Unconventional Oil and Gas
Ali Moshiri is President of Chevron-Africa and Latin America- Exploration and Production. Earlier today he addressed the Houston Chapter of the American Petroleum Institute. While his remarks were specifically about unconventional energy plays in Argentina, he articulated principles which transcend borders.
Unconventional energy includes shale gas and tight oil reservoirs. Unconventional projects do not make sense where there is an abundance of conventional oil and gas. Also, they are not justified unless the host country is industrially developed enough to support sufficient demand for additional domestic energy. While both of these conditions apply in Argentina, the concept is universally applicable.
Unconventional prospects walk an economic tightrope. Consequently, strategic evaluation, detailed planning, and vigilant cost management are essential for success.
In Argentina the government sets the price of energy at the gas pump or burner tip, and works backward to come up with well head prices. This approach, as opposed to free market pricing, is a two-edged sword; the government wants prices low enough to prevent civil unrest, but high enough to discourage imports.
I am trying to get a copy of Mr. Moshiri’s remarks and if successful, will post a future article with more details of his insightful and provocative presentation.