Developing Unconventional Gas Conference 2009
April 8-9, Fort Worth, TX
By: Austin Eudaly

Exploration and production companies from across the globe gathered in Fort Worth, Texas over the past two days for the 4th annual Developing Unconventional Gas (DUG) Conference presented by Hart Energy Publishing. The list of companies in attendance read like a “who’s who” in today's US shale exploration industry. What better place to get a pulse on the trends and ideas regarding the Haynesville Shale than a room full of exploration and production executives? I hope to give all of you Shalers out there a concise account of what was generally discussed amongst some of the key individuals in the natural gas industry.

Andy Hopwood, Vice President of BP America Inc, was the first keynote speaker on Tuesday morning to address the crowd of roughly 600. BP, a global petroleum “major,” has taken an interest in the unconventional plays of North America over the past few years. The following are a few bullet points summarizing Mr. Hopwood's address.

Andy Hopwood, VP of BP North America

-In terms of LNG, it is undoubted that 8-10 Billion cubic feet of gas per day (Bcf p/d) will come online in the future from the Middle East; where it goes remains unclear. Europe? China? The balance of it comes to the US.

-Unconventional gas plays make up 10% of BP’s natural gas production. They see North America as a global “test bed” for unconventional plays. Wells drilled in the Hayneville Shale will help engineers and geologists learn how to complete future wells in places such as Australia and Europe.

-The industry has gone from 1600 rigs up and running last year, down to about 800 currently. This is unprecedented in the oil and gas business. Mr. Hopwood believes this will directly affect natural gas prices within the next 12-18 months. With so many rigs out of commission, production will naturally decrease and gradually bring demand and prices back up to a “healthy” level in the near future.

-Mr. Hopwood also noted that “Energy is fundamental to the US economy.” He stressed that some of the decisions being made in Washington regarding the US’s energy future could have far reaching effects and consequences.

-He also brought up that BP is still heavily involved with conventional gas plays in the US. With all the talk in the last few years regarding shale plays, many people tend to forget that conventional gas plays still represent around 50% of US production to date.

An overview of BP’s Portfolio:

-2/3 of BP’s assets in the US are in “unconventional” plays such as the Haynesville Shale.

-BP’s position in the Haynesville: They acquired (not leased) a position in the play. Nearly all of BP’s acreage in the Haynesville is held by production. This said, Hopwood stated that they will begin a modest drilling program later in 2009. BP is in no hurry to begin drilling due to low natural prices. They will opt to wait for a more favorable time in the future. With this said, there is a clear advantage for operators who own acreage that is currently held by production.

At the end of his discussion, a few questions were permitted. Keith had asked me to pose a few specific questions and I got had a chance to get one in right off the bat.

My Question: “What has prevented BP from becoming more active in the Haynesville?”
Hopwood: “Time/ Pace. We would like to spend a long time understanding the basin before we put ourselves out there. Since our acreage is HBP, we are in no particular rush.”

Other questions from the crowd soon followed:

Question: “Are you looking at unconventional gas abroad as well?”
Hopwood: “Yes, and US is our fundamental test bed for these types of plays.”

Question: “How do you see environmental issues unfolding?”
Hopwood: “We need to be able to understand what sort of footprint each site has. We must hold ourselves accountable.”

Hart Energy Publishing’s Leslie Haynes had a last question for Mr. Hopwood:

Question: “Do you anticipate any majors buying a large US independent?”
Hopwood: With a coy grin he replied “No comment.” This got a nice chuckle out of the crowd.

If you have further questions, Austin can be reached at Austin.Eudaly@gmail.com

STAY TUNED. Tomorrows Topic. The Natural Gas Glut…