Faced with the relentless challenge of not only replacing existing oil and gas reserves but also growing global production capacity to meet soaring demand, the question is constantly asked – where’s it going to come from?

That question, in turn, has led many over the last 15 years to identify the offshore sector—especially deepwater—as the likely source.

But with the astonishing rise of unconventional production in the U.S.—an energy renaissance happening before our very eyes—competition for the dollars needed to find and produce from these “rival” resources is fierce. By 2020 shale is expected to make up approximately 25% of total global E&P expenditure.

These rising volumes of unconventional oil are offsetting the decline in conventional oil in the U.S., and while deepwater will continue to add to conventional totals with the large volumes it produces, the long lead times, greater exposure to execution risk and higher costs remain challenging.

But it’s worth pointing out that the break-even price for oil still remains similar between unconventionals and offshore.

Despite being two such different creatures, they retain many synergies. New and improved technologies remain integral to unlocking both, while the issue of social license to operate is equally applicable.

A panel at the recent Offshore Technology Conference in Houston flagged the importance of retaining that social license. “Getting it right in terms of public acceptance is actually more important than technology itself,” said Greg Guidry, executive vice president of upstream Americas for Shell. “If our activity is not accepted, frankly the technology doesn’t matter.”

Commenting on the reputational aspect, he added, “I can’t think of any major incident in deepwater that wouldn’t have a dramatic impact on what we do onshore, and I can think of a number of incidents onshore that would have an impact on the acceptance of what we do offshore.”

Guidry went on to point out that specific technologies also don’t always naturally transfer between different regimes such as these. “In terms of synergy of technology, there are certainly learnings to be shared, but in terms of being a laboratory one way or the other deepwater is an awfully expensive place to evolve onshore technology,” he commented.

Torstein Hole of Statoil agreed there were lessons to be passed between deepwater and unconventionals, but that they might be better applied to processes such as safety and management techniques.

Marathon Oil’s CEO, Lee Tillman, admitted both were necessary to meet a projected 60% growth in energy consumption over the next three decades. His company is spending $3.6 billion on onshore unconventionals this year, for example—more than it spent globally (onshore and offshore) just six years ago.

He summed it up nicely: “Fossil fuels, and especially oil and natural gas, are going to remain the largest source of energy going forward. When you consider unconventionals vs. deepwater, it’s not an ‘either/or’ proposition.”

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