Bass Energy & Exploration is independently owned and operated by the Bass family.
Bass Energy & Exploration
7 NE 6th Street
Oklahoma City, OK 73104
Bass Energy Investing Blog
The oil and gas industry stands at a fascinating crossroads of tradition and innovation, marked by two distinct types of reserves: conventional and unconventional. At Bass Energy & Exploration, we recognize the importance of understanding these differences, as they guide our exploration strategies and investment decisions. This post delves into the key distinctions between conventional and unconventional reserves, shedding light on their impact on the industry.
Conventional oil and gas reserves are found in large, porous rocks, typically sandstone or limestone, which act as natural reservoirs. These reservoirs are like sponges soaked in hydrocarbons, with natural pressure pushing the oil or gas to the surface.
Drilling into these reservoirs is often a straightforward affair. The natural pressure in the rock formation propels the oil or gas upwards, making extraction relatively easy and cost-effective. Traditional drilling techniques, such as vertical drilling, are predominantly used.
With well-established techniques and predictable outcomes, conventional drilling is often viewed as a lower-risk investment. It has shaped the backbone of the oil and gas industry for decades, offering stability and predictability.
Environmental Footprint
Conventional drilling, while not without its environmental impacts, typically requires fewer wells and less land disturbance compared to its unconventional counterpart, leading to a relatively smaller environmental footprint.
Unconventional reserves are trapped in less permeable rocks, like shale or coalbeds. These formations make the hydrocarbons harder to extract, requiring more than just a simple well.
Advanced Techniques Required
Extracting these resources often involves innovative technologies like hydraulic fracturing (fracking) and horizontal drilling. These methods create pathways in the rock, releasing the trapped oil or gas.
Higher Investment and Greater Risks
The complexity and variability of geological formations make unconventional drilling a more technology-intensive and costlier endeavor. It poses higher risks but also promises access to vast resources previously deemed inaccessible.
Environmental Considerations
Unconventional extraction methods are more invasive, with a larger environmental footprint. Issues like higher water usage, potential water contamination, and increased land disturbance are significant considerations.
For potential investors and industry professionals, understanding these differences is crucial. Conventional reserves offer a more traditional investment path with lower upfront costs and risks. In contrast, unconventional reserves open doors to vast resources, albeit with higher initial investments and technological demands.
The information provided in this article is for informational purposes only and should not be considered legal or tax advice. We are not licensed CPAs, and readers should consult a qualified CPA or tax professional to address their specific tax situations and ensure compliance with applicable laws.
Bass Energy & Exploration is independently owned and operated by the Bass family.
Bass Energy & Exploration
7 NE 6th Street
Oklahoma City, OK 73104