“Welcome to the party!” quipped keynote speaker Kenneth Hersh to the crowd gathered for the fifth annual University of Oklahoma Energy Symposium on March 30.

Thanks to the unconventional bonanza moving oil and gas from a history of scarcity to an era of abundance, the hydrocarbon industry has become “just like every other business,” said Hersh, CEO of the George W. Bush Presidential Center and co‐founder and advisory partner, of the major private-equity firm NGP Energy Capital Management. “Oil markets were insulated because of the export ban. That is now gone. Gas markets were insulated because of the lack of ocean transport. Now there are LNG export terminals. U.S. oil and gas are now both on global markets.”

Hersh cited two examples where that global presence has been a win for U.S. producers.

“The Saudis did battle with the entrepreneurs in this room and lost,” he said. “So there was a production cut, which was called an OPEC cut, but fewer than half of the producing countries that agreed to the cut were actually members of OPEC. So how is that anything other the market deciding there was overcapacity? It was just like carmakers or airlines all looking at the same market conditions and making their own decisions.”

The other example related to a strength of U.S. oil and gas executives: relationships.

In a global market, “strategy matters as much as execution, just like any other business,” he said. “Now you have to know your customers. Nigeria had customers for their light oil. Then along came the people in this room. Nigeria had no relationship with their customers, so there customers went elsewhere. Now they are scrambling to sell their light oil.”

Cautioning the delegates not to feel to smug about those early wins, Hirsh warned, “now you have to run your business like any other business. You have to know your customers too. ‘Customers?’ You are thinking. ‘I have customers? I have gatherers, and truckers, but customers?’ This industry never had to know its customers until now. That is why people in other businesses are saying, welcome to the party.”

To some extent, the competition for oil and gas market share is like that for breakfast cereal.

“So you have to know your customers [and their needs],” Hersh said. “You have to consider price points and supply chain. You can produce whatever you want, but so can your competition. The risks are no longer below ground but above. You used to have to go where the oil is. Now it is a matter of wanting to go. Angola or West Texas? It’s like real estate. Do you want to build in Oklahoma City or Tulsa? Dallas or Fort Worth?”

Looking ahead, Hersh expects that global demand for oil will continue to rise at 1 million to 1.5 million barrels a year for the next 10 years.

“There will be gain in efficiency that will cut demand in the developed world, but increasing demand from others will take up the slack,” he said.

As a result there will be continued incentive to produce and continued competition among producers.

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