Until recently, majors went anywhere but the onshore U.S., thinking it was tapped out. Instead, they hunted “elephant” fields with huge reserves in deep-water locations or far-flung countries…This played to their strengths. Huge balance sheets and solid credit ratings allowed them to finance megaprojects. […]Not so with shale. Onshore wells cost a fraction of a deepwater hole in the Gulf of Mexico. So a big balance sheet isn’t a prerequisite to play.
This isn’t good news for China, which is desperately trying to replicate the US shale revolution. China’s biggest strength—the driver behind its phenomenal growth in recent decades—is its ability to mobilize its resources en masse. But that strategy will be ineffective in extracting shale energy, especially considering the complex and varied geology in which the country’s hydrocarbons lay trapped.The oil and gas industry is used to seeing small “wildcatting” firms coming in to pioneer new plays, but not to seeing these companies out-compete the industry giants once the hydrocarbons started flowing. Shale is revolutionizing more than just the geopolitics of energy, and these changes suit America just fine.