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BHP exec explains shale success

A BHP Billiton executive at a recent press briefing in Texas talked about how the company has had to adjust its operations now that it is running rigs in onshore shale deposits. The Melbourne-based BHP Billiton has extensive experience in deep-water, offshore rigs. Water-based developments often take seven to 10 years to bring to production. The company is finding that a shale rig can reach production stage in as little as 20 days.

BHP has also determined that the onshore drillings do not require the extensive permitting process as required for offshore leases. BHP's first important shale purchase was Chesapeake Energy Corp.'s Arkansas property in the Fayetteville shale. The purchase was followed by a merger with Eagle Ford shale leader Petrohawk Energy.

Since its first onshore shale acquisition in 2011, the company has grown its shale operations to the point where they currently account for 42 percent of BHP's worldwide oil and gas production. The executive stated that the shale business is driven by continuous improvement. In order to derive improved benefit, each well must be developed better than the last one. From seven employees, the number of employees supporting shale operations has grown to more than 2,000, and the company is building an office tower in Houston to house its expanded force.

The BHP executive spoke of how the shale business requires nimbleness and the ability to make decisions quickly. The company has included both purchases and mergers in its growth strategy. A business attorney may be a valuable partner to a company that is expanding and requires timely action in a fast-paced market.

Source: Oil & Gas Journal, "BHP exec: Shale success requires rethinking business approach", Rachael Seeley, June 03, 2014