The gap between offshore E&P opportunity and onshore shale plays grows wider by the day. But both need to be as important as the other to fulfilling U.S. demand for energy. Offshore, the national media has moved on from the aftermath of the BP oil spill, but the people of the oil and gas industry cannot. The drilling moratorium is causing havoc. There are close to 10 investigations ongoing about the spill, with stricter regs--and higher costs--to follow. Thankfully, though, the Macondo well is capped. The relief well is down. Damage to the marshes and the fishing and tourism industries appears to be abating, and is not as horrible as once feared. BOEMR director Michael Bromwich has declared that he will do what he thinks is right, regarding the moratorium, even if that does not make the industry happy. Offshore producers don't know where they stand. That uncertainty has them, and their investors, worried. You will learn more about it in our October issue cover story. Our editors talked to operators, M&A experts and analysts to survey the outlook. As an aside, I recently visited George Mitchell, the legendary father of Barnett shale drilling, and the largest shareholder in Devon Energy Corp., which acquired his Mitchell Energy & Development some years ago. Mitchell said he told Devon not to sell all its offshore assets, but to keep a half interest in all of it, "and I told them, let BP prove up the reserves for you." He sees the value of the Gulf of Mexico, and would not be deterred by recent events. But people drilling shale leases know where they stand. It's full speed ahead and damn the low-gas-price torpedoes! Expiring leases in certain shale plays demand their full attention. Shale lease expirations are an interesting factor to track, according to DrillingInfo's Ramona Hovey, who spoke at our recent A&D Strategies & Opportunities Conference in Dallas. The leasing frenzy of the last few years will lead to a lot of undrilled acreage coming up for renewal--or top leasing--next year. E&P companies just cannot get to all of it in time, even when they are backed by JV capital from a much-larger partner. Its all in the timing, and the availability of rigs and frac crews. It's about choices, too. Which shale, when, which county? Now that Pennsylvania is allowing production data to be released every six months, we are learning what we wanted to know about the Marcellus shale. A recent study by the Powell Barnett Shale Newsletter indicates that the best wells in the Marcellus yield double the production as the best Barnett shale wells. In the coming months, we could see rigs leave Texas for the Keystone State, if lease considerations are not preventing that exodus. Low gas prices don't help. --Leslie Haines, Editor-in-chief
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