The growth of unconventional oil and gas activity in North America is hard to overstate. Shale-related oil and gas drilling activity now dominates North American rig counts and capital expenditures. Gas production in North America from all unconventional sources (tight sands, coal bed methane and shale gas) represents more than half of all production with shale gas representing more than 25% of domestic production. The contribution from shale gas has reversed the production decline and kept North American gas prices low. Liquids production from shales have also reversed domestic decline and are the current hotbed of activity.
Reserves and production from shales are sufficiently large that they compete with deepwater projects in attractiveness. This presentation compares the economics of unconventional drilling projects with deepwater and conventional international oil exploration and development projects. Comparably sized total projects (100 and 250 million BOE) for each project are analyzed with typical costs, timing, net cash flows and economic results illustrated. The net cash flow profiles of each project along with other risks, similarities and differences are illustrated.