Just 63 now, Bobby Shackouls led Burlington Resources Inc. to a $35.6 billion sale in 2006 to ConocoPhillips, which was the first major to recognize that an independent exploration and production (E&P) company's access to unconventional resources onshore the U.S. would put it at the front of the shale-play renaissance.

Shackouls began his career in oil and gas with Exxon Corp. in 1972, with a chemical engineering degree from Mississippi State University. From there, he joined wildcatters Joe Walter and Fox Benton at Houston Oil & Minerals Corp. through its sale to Tenneco Oil Co. in 1981. With his boss, Shackouls co-started a predecessor to Plains Resources Inc., which is now a part of Freeport-McMoRan Copper & Gold Inc. He joined Torch Energy Advisors Inc. in 1988, becoming president and CEO.

At the time, Burlington Northern Inc. was rolling up its natural-resource businesses into a spin-off, Burlington Resources. Shackouls joined the E&P company in 1993 and was named chairman in 1997.

Currently, he serves on the board of former Burlington managers’ Bakken-focused Oasis Petroleum Inc. and on the boards of Plains GP Holdings LP, Kroger Co. and Peter Kiewit Sons’ Inc. In addition, he is an advisor to The Carlyle Group.

At his alma mater, where he is president of the university’s foundation, Shackouls is working toward adding a petroleum engineering curriculum. When joining Exxon with a chemical engineering degree, the company trained him and other engineers in producing hydrocarbons. “I didn’t know what a reservoir engineer was supposed to do, but it was my only job offer, so I took it,” he says.

“The chemical business was in the tank at the time. It really wasn’t that much different: In chemical engineering, you’re dealing with hydrocarbon-phase behavior and a hydrocarbon reservoir is, really, just a big fractionating column that has been in equilibrium for hundreds of millions of years.”

Oil and Gas Investor visited with Shackouls recently on his outlook for further development of unconventional resources.

Investor: A great deal of Burlington’s unconventional-resource work in the 1980s, such as in the Bakken and in the Fruitland coal, contributed to the modern understanding of these reservoirs.

Shackouls: I’m really proud of all the people we had there. They were a great group and it’s a lot of fun to see how well they’re doing after BR.

Investor: Burlington was working the upper Bakken shale where it was naturally fractured. Did you think it would one day be figured out?

Shackouls: We knew it had tremendous potential. We didn’t have the technology at the time to unlock that potential. We knew the resource was there. Being able to predict how technology would evolve and come to be utilized to liberate that resource was a bit difficult to see way back then. We were using horizontal wells to link up the natural, vertical fractures in the shale itself. Today, we’re creating those fractures throughout the entire section.

Investor: You then translated that horizontal experience to unlocking the Red River B in Cedar Hills Field.

Shackouls: Cedar Hills was the first horizontal waterflood. That’s where we took horizontal drilling technology and utilized it in a different way. We would inject water in a horizontal wellbore and produce the oil from a parallel, horizontal wellbore. It was a different recovery mechanism.

Investor: Are you surprised by how quickly innovation has come about?

Shackouls: I wouldn’t say I’m surprised. This is due to a lot of experimentation in the field. The evolution of horizontal drilling and high-pressure frack technology is something we take from learning from previous ventures and applying that to the next one. That’s what the industry does. What really has made me marvel is how we have been able to apply that learning in such an effective and quick manner.

Investor: How is it that a company the size of Burlington was so quick afoot?

Shackouls: What differentiated us is that we had people on the ground in Farmington, New Mexico, for example, in the Fruitland coal. They lived in Farmington and worked in Farmington, and they had the autonomy to run that division like a small company, so they were able to react much more quickly than if they had to run things up the command structure. That made that unit much more effective and much more economic. They could make decisions on the fly and they were judged strictly on their performance.

Investor: You had had previous experience with coalbeds.

Shackouls: At Houston Oil & Minerals in the 1970s, we were drilling a 15,000-foot oil prospect in Queensland, Australia. We went through a coal seam at 3,000 feet that just gave us fits. It kept kicking and we’d weight up and the well would start taking fluid. We’d lighten up on it and it would kick again. It had a lot of gas. The well was dry at the 15,000-foot level. We decided to perforate the coal. It made 15,000 barrels a day of freshwater. We didn’t understand it; in the laboratory, we figured out the difference between adsorption and desorption.

Investor: What was the solution?

Shackouls: We learned we had to produce the water out of the coal seams to lower the pressure to the point that the coal would desorb the gas from the surface of the coal and allow it to come free and flow.

Investor: With yet-higher oil and natural gas prices in the future, what are plays that might be possible?

Shackouls: Higher crude prices are medicine for a lot of ails. The adage in this industry is that the best place to look for oil and gas is where it has already been found. There is a lot of redevelopment that can occur in mature areas where we know the resource potential exists. Higher prices can lead you back to these prolific, depleted areas. There is a lot that can be done with higher prices.

Investor: What’s the one that got away?

Shackouls: At Torch Energy, we tried deploying what BR was pursuing in the Fruitland in the Black Warrior Basin. It wasn’t a failure, but it wasn’t the economic giant the San Juan Basin was. It was just too fragmented and we didn’t have the technology at the time. It’s one where, when gas prices rebound, someone might go in and redevelop it.

In the Black Warrior Basin, the coals tend to be thin and very stratified—a lot of stringers of coal—whereas, in the San Juan Basin, there are two, big, thick veins. Completing those wells in the San Juan Basin was a lot easier than trying to complete four or five thinner zones. As I recall, we couldn’t get the wells to unload all of the zones very easily.

Investor: Burlington also explored overseas. Will unconventional resource development occur there in those political regimes?

Shackouls: It will probably be a lot slower. The national oil companies don’t tend to move as fast. It will happen, but it will be at a much slower pace than here in North America in an environment of free trade in a free market.

Investor: What advice do you give to newcomers to industry?

Shackouls: Work hard. Pay attention. I’ve had lots of great mentors in my career. I’ve learned a little bit of everything from each of them. From Joe Walter and Fox Benton, I learned how to run a business. And don’t be afraid to try new things. That’s what has really led us to where we are today with these shale plays—people being willing to take chances, experiment and turn it into an economic engine. Don’t be afraid of taking chances; you will never know what might have been, if you don’t.

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