The term 'unconventional' resources refers to things like oil sands, coal bed methane, tight sands gas, and various forms of shale gas, the key being that these are not the usual oil and natural gas drilling operations. Unconventional resources take different equipment and techniques, take longer to develop and are generally more capital intensive than 'conventional' oil and gas production, and yet tend not to produce at the same high initial velocities, and thus, for most of the oil industries' history have been sort of the ugly (and somewhat neglected) stepchildren.
There is a flipside to the slower production of unconventional resources though: Production tends to be more even over the life of the resource, and the lifespan tends to be longer than that of conventional resources.
Though much of the focus these days is on oil and the possibility of peak oil, it's interesting to note that the last three major US takeovers in the energy industry revolved mainly around gas resources, including unconventional resources. This reflects both the fact that most of the easy oil and gas is already either gone or spoken for, and the fact that the US natural gas market, though well supplied at the moment, over the longer term will likely reflect increasing tightness as demand rises and US production struggles to keep pace, and so far at least, the much ballyhooed rise in LNG imports appears to still be a ways off.
Unocal, which was taken over by ChevronTexaco, owned some nice natural gas assets in Asia. ConocoPhillips purchase of Burlington Resources (BR) revolved around onshore US based production of natural gas, and BR had both conventional natural gas and unconventional gas production. Anadarko is now about to purchase both Kerr-McGee and Western Gas Resources (WGR), two deals which again focus on natural gas, with a mix of deepwater production and unconventional gas production (coal bed methane from WGR).
The focus on gas resources in recent deals, together with recent insider buying at gas producers Chesapeake Energy, XTO Energy, McMoRan Exploration, and a bit at Quicksilver Resources, are a clear signal that energy insiders are bullish that gas production is going to be a profitable enterprise in the future, and that unconventional resources have really come of age.
For further info on the recent deals:
The Oil Drum: Drilling on Wall Street.
For further info on the recent deals and some stock ideas:
Jubak's Journal: What $21 billion can teach you.
CNBC Video: Jim Jubak on Anadarko Deals.
Jubak highlights the stocks KWK, EOG, and UPL. ECA, SWN, and XTO are other possibilities to look at.