The oil downturn, while devastating for the energy industry, also bought companies time to study their shale plays, a benefit that several top executives have touted during the CERAweek energy conference this week.
The heads of Chevron, ConocoPhillips and Occidental Petroleum all emphasized that companies should take time to know geology before drilling, in contrast to a bonanza of rapid, less-informed drilling fueled by high oil prices years ago.
Ryan Lance, head of Houston-based Conoco, said companies should beware that a steep learning curve is often present when exploring new shale plays, and being more knowledgable is often more beneficial than drilling quickly.
“Why do you drill into it so quickly, when you are still learning so much?” he said during a Tuesday interview with Dan Yergin, vice chairman of conference sponsor IHS Markit.
Vicki Hollub, Houston-based Occidental’s CEO, said the company had deliberately scaled back its global operations during the downturn to focus on the areas it knew well. During the downturn, the company was able to expand its knowledge of the Permian and better position itself get back to work when prices began to rise again, Hollub said.
“We didn’t have think time when the price of oil was more than $100 per barrel,” Hollub said on Tuesday. “So we have had time to think.”
It seems to be a winning approach, and one that John Watson, Chevron’s CEO, said during a Thursday interview with Yergin.
Companies tend to get sloppy when profit margins are higher, and the downturn forced them to focus. But Watson also stressed not underestimating the potential for known areas — like the Permian basin — to offer new discoveries, if companies take the time to study them.