Hi, I’m Nissa Darbonne, executive editor-at-large for Hart Energy. We're visiting here at SUPER DUG Conference & Expo in Fort Worth, Texas with Doug Lawler. Doug is president and CEO of Continental Resources. Doug, thank you for joining us.
DL: Thank you, Nissa.
ND: Doug just spoke here at the conference and we discussed lots of topics, but there are a few in particular I wanted to narrow in on here first. Since Jan. 20th, what are you seeing in terms of permitting? Is that beginning to improve or [are] the permits beginning to be issued?
DL: Yes. Well, it's great to be with You Nissa. And yes, indeed, the energy around the administration, particularly the Secretary of Interior, Doug Burgum, Secretary of Energy, Chris Wright, the energy that they have in how to mobilize energy resources, oil and gas resources in the U.S. is very, very strong and we've been very, very encouraged. We have seen some early progress with respect to getting some extensions around some of our federal permits. We anticipate that there'll be a lot more as they continue to focus on how to streamline that permitting process. We were really excited to hear Doug Burgum speak a few weeks ago with respect to environmental assessments as well as environmental impact statements on how he anticipates that the one-to-two-year timeframe should be 14 [days] to 28 days that new permits could be achieved. So we're not quite there yet, but we're very excited about the work that they're doing and their energy level about trying to streamline that permitting process.
ND: Still on permitting, Wyoming, obviously a lot of federal land there. I understand that you only have as many permits right now for the Powder River Basin remaining that'll get you through this year. You'll not have any yet for next year unless those get issued. But at the same time too, you're seeing that Powder River Basin still has incredible opportunity. Tell us about it.
DL: Yeah, so the Powder River Basin is one of the four core assets inside Continental's portfolio. And as you're aware, the Powder River Basin has been challenged in the past several years, 10 n[years] or 20 years. Principally because some of the subsurface technical challenges with the sands and the shales have made it a less attractive investment opportunity for many operators. We established that position a few years ago and are making some really, really good progress, specifically in the shales, where we're super excited about that potential, what it can mean to our portfolio. The permitting process is a part of what we need to be in place in order to continue to invest. We are making some technical breakthroughs with respect to longer laterals, stimulation design, bottom hole assemblies and our drilling that we're really encouraged about what the Powder River Basin could mean inside of our portfolio in the future. And as you're aware, there's a mile of a stratigraphic column there of sands and shales to be exploited and developed. So the permitting process, understanding how we can improve the commercial aspects of the play are front and center because we see this is an asset that has several billion barrels of resources to be mobilized.
ND: Well, you mentioned longer laterals. How long?
DL: So most wells that we've drilled have been in the 2-mile range, but are evaluating the 3-mile with a few tests now and potentially could exceed the 3-mile as well. So it's exciting what that technology is developing there for us.
ND: In the formations that you're targeting in the powder, in your leasehold, is it easy to stay in zone as much as 2 miles? Much less three. Is it hard to chase it?
DL: It's not too difficult. The more wells we drill, the more comfort we get. We principally right now are focused on the Mowry and the Niobrara. We'll continue to drill some of the sands, some of the Sussex and Parkman [sandstones] as well in that play along with that core area. It has some extension opportunities in the sand and shales that we see as attractive and interesting for future development. That permitting process and streamlining so that we can move much more quickly or expeditiously will be very key to that future investment in Wyoming.
ND: Also too, Turkey. So you've signed in March an agreement to explore in Turkey in a joint venture there. First, if you could tell everyone about that joint venture in your plans, but also to let them know if others in the industry read into this. That means Continental thinks there aren't any more opportunities in the Lower 48.
DL: Yeah, that's a great question and comment. Continental spends about five to 10% of our annual capital budget on exploration. Most of that is focused in the U.S. We're one of the few companies and certainly one of the few independent companies that are doing a lot of exploration even yet still on the current pricing environment. And the need for that is that we strategically want to have a 10-year timeframe, longer than 10 years really, timeframe of competitive investments to invest in our portfolio. Our entrance into this JV [joint venture] with Turkish Petroleum, TPAO, and TransAtlantic here in Dallas is a really interesting opportunity. Turkey is a very sophisticated country. It has a significant number of conventional and unconventional plays. They're doing a lot of good work inside the country and in some international areas as well. So this opportunity for us is not a reflection of confidence in the U.S. or opportunities in the U.S. It's a compelling investment opportunity to explore and partner with those two entities in what we consider could be a meaningful opportunity. We do see that expiration and the depletion of a lot of the unconventional assets over time in the U.S. will be a challenge for all companies. But we presently are continuing to invest in exploration in the U.S. and we see our investment in Turkey as just a continuation of that exploration investment.
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ND: We also talked about a couple leading industry members have said recently that U.S. oil production will peak in the coming few years between now and 2030. What are your thoughts on whether we're going to see peak oil in the Lower 48?
DL: Well, I think that some of those comments from other industry executives and leaders in our industry we're very well founded and well placed. With commodity prices and the potential pullback in capital investment for opportunities that are being drilled today, investment opportunities that are being drilled in a lower price environment. It's a challenging treadmill that we're on from an unconventional basis here in the United States. I think I would just add to that, that as you think about it potentially peaking in the near term, to me, I think that that's an accurate statement, but I might add the caveat that I really see it kind of plateauing for a while. Because what we will see technology [wise], we will see efficiency improvements that will continue to enable additional investment, whether it be in the core plays and the tier one core plays where efficiencies improve or whether it be in tier two, tier three or taking some of those technologies to the lateral or greater extent of the plays will result in adding volume. So I think that those statements in general were very good and accurate. We're definitely going to see a slowdown in activity as a result of the pricing pressure that we're recognizing here at home. But as we approach that peak, I don't think we'll hit a certain point and then just drop off dramatically. I think we'll be on a plateau for a while.
ND: Super. That's very encouraging. Thank you, Doug. And thank you for joining us, stay tuned here for more actionable energy intelligence.
